Commerzbank Sues BNY Mellon, Wells Fargo, HSBC Over Mortgage Losses

Commerzbank AG has sued four banks in the United States, claiming that they failed to properly monitor billions of dollars in toxic mortgage-backed securities acquired by the German lender before the 2008 financial crisis.

Bank of New York Mellon Corp and units of Deutsche Bank AG, Wells Fargo & Co and HSBC Holdings Plc were named in the lawsuits filed on Wednesday and Thursday in Manhattan federal court.

BNY Mellon was the trustee for over $1 billion in mortgage-backed securities bought by Commerzbank and $1.3 billion of investments tied to a collateralized debt obligation, Millstone II CDO, court documents showed.

BNY Mellon "abandoned its obligations to protect the rights of investors" and did nothing to protect the collateral underlying the CDO, Commerzbank said, noting that it suffered $750 million in losses.

Commerzbank made similar claims involving mortgage-backed securities of $640 million in the Deutsche Bank case; $290 million for Wells Fargo; and $204 million for HSBC.

Representatives for BNY Mellon, Deutsche Bank and Wells Fargo declined to comment. A representative for HSBC did not respond to a request for comment.

The cases in the U.S. District Court, Southern District of New York, are Commerzbank AG v. The Bank of New York Mellon, No. 15-10029; Commerzbank AG v. Deutsche Bank National Trust Company, No. 15-10031; Commerzbank AG v. Wells Fargo Bank N.A., No. 15-10033; and Commerzbank AG v. HSBC Bank USA, National Association, No. 15-10032.