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French town sues Deutsche Bank over loan
2009-10-26
SAINT ETIENNE, France (AFP) - A town in southern France is planning to take German giant Deutsche Bank to court over a "toxic loan" in what could be the first of many such cases, the local mayor said on Monday. Saint Etienne, a town with a population of around 175,000 near the city of Lyon, took out a 20-million-euro (30-million-dollar) complex loan linked to the value of the pound, which has plunged in the financial crisis. "It's because our negotiations with Deutsche Bank have fallen through that we are taking for the first time, but perhaps not for the last time, this type of decision," mayor Maurice Vincent said at a press conference. Vincent said the town is currently paying a 4.3-percent interest rate on the loan but will have to pay a 24-percent rate starting in April next year. He also said he was in touch with other French municipalities exposed to risky loans to organise joint action against banks that gave out the credit. The case is being brought before a superior court in Paris and will request that the loan be cancelled because of insufficient information, he said. Saint Etienne is also in negotiations with French banks Dexia and Natixis, German-Irish bank Depfa and British lender Royal Bank of Scotland over loans taken out to finance the town's 400-million-euro debt.
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