London hotelier sues Barclays over interest rate swaps

George Sell George Sell Uploaded 16 January 2017

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UK: Kishorkant Bhattessa, the owner of the Mandeville Hotel in Marylebone, is suing Barclays over three interest rate swaps taken out by his company in 2007 and 2008.

UK: Kishorkant Bhattessa, the owner of the Mandeville Hotel in Marylebone, is suing Barclays over three interest rate swaps taken out by his company in 2007 and 2008.

Bhattessa says Barclays mis-sold him almost £22 million of "risky, speculative" financial products, resulting heavy losses.

In papers filed at the High Court, Bhattessa alleged that Barclays negligently sold him £21.75 million worth of products designed to protect him against a rise in interest rates. He claimed the bank failed to advise him on the extent of the losses he would suffer if rates fell heavily, which they did between 2007 to 2009.

Bhattessa alleges Barclays would not give him a loan unless he took out the rate protection. The swaps had a 20-year duration, he said - far longer than his loan.

Bhattessa said the "speculative instruments" had caused him losses of £11.7 million due to the drop in rates from 5.75 per cent to near zero following the financial crisis, and is calling for the losses to be written off.

Barclays said Bhattessa was a "shrewd and experienced businessman" who understood the risks. The bank said his allegations were "misconceived" and "opportunistic" and that it would be "vigorously defending" the case.

In 2015, Firmdale brought a similar case against Barclays.

Click here to read an article by Andrew Harrington of AHV Associates about how to avoid interest rate swap issues when dealing with banks.

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