Deutsche Bank has reportedly agreed in principle to pay up on a disputed credit default swap in which it provided protection to UBS on a company that designs and manufactures floors and ceilings. An official close to the situation said UBS will dismiss a lawsuit it brought against Deutsche Bank for failure to pay in the swap after what it thought was the reference company filed for chapter 11 bankruptcy protection last year. Terms of the settlement could not be determined by press time, the official said, noting that neither party has yet signed on the dotted line. Spokespersons at Deutsche Bank and UBS declined to comment.
UBS last year thought it agreed to buy from Deutsche Bank five-year credit default protection on Armstrong World Industries, according to court documents obtained by DW. But the trade confirmation it signed listed a different entity, Armstrong Holdings, the parent of Armstrong World Industries, which has no material public debt. When Armstrong World Industries filed for bankruptcy protection last year, UBS tried to exercise the credit default protection. Deutsche Bank's refusal to pay resulted in UBS filing a claim in the High Court in London against Deutsche Bank seeking to enforce the default swap.
