British banking giant NatWest has initiated legal proceedings against CMIS, a mortgage finance company formerly backed by General Motors, seeking over €155 million in damages.

The lawsuit, heard last week at the High Court in London and reported on by the Financial Times, stems from securitisation deals made in the lead-up to the 2008 financial crisis.

The dispute centres on agreements between ABN Amro, which NatWest acquired in 2007, and CMIS, then operating as General Motors Acceptance Corp (GMAC). These deals were designed to manage financial risks associated with the securitisation of residential mortgages in the Netherlands and Germany.

Between 2006 and 2008, fixed-rate mortgages were bundled and sold to investors as securities offering variable returns. To mitigate the risk of cash flow mismatches and secure AAA ratings, GMAC entered into interest rate swap agreements with ABN Amro, including "deeds of indemnity" under which NatWest claims payments are due.

NatWest's legal team argued that CMIS has failed to make due payments since 2017, after a decade of compliance. Jonathan Davies-Jones KC, representing NatWest, suggested that CMIS's change in stance was due to a "significant increase" in required payment amounts.

CMIS, now owned by funds managed by Fortress Investment Group, originated approximately €10 billion in Dutch mortgages between 2000 and 2008. The company's counsel, Tom Smith KC, stated that CMIS is "effectively in a state of run-off" and lacks sufficient funds to meet NatWest's demands.

Smith also highlighted the context of the original agreement, noting it was signed "at the height of the securitisation bonanza, immediately prior to the global financial crisis" by executives from General Motors and ABN Amro, both of which faced significant challenges during the financial downturn.

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