LONDON: HSH Nordbank, a state-controlled German bank, said Sunday that it planned to sue UBS, a Swiss bank, over a portfolio of complex debt products, which it accuses UBS of misrepresenting and mismanaging.

HSH Nordbank, with headquarters in both Hamburg and Kiel, said it wanted to recover “significant losses” from a $500 million portfolio of collateralized debt obligations, or CDOs, linked to the U.S. mortgage market, which it bought from UBS in 2002. HSH said it planned to file a claim against UBS this week in New York State, under whose legislation the original deal was constructed.

A spokesman for UBS, Dominik von Arx, declined to comment.

Some investors have started to file legal claims against financial institutions as they aim to recover part of their losses accumulated during the subprime mortgage crisis.

The top securities regulator in Massachusetts this month accused Merrill Lynch of defrauding the city of Springfield with subprime-linked investments. The claims cast a light on how large financial services firms sold complex debt products, which are losing value in the subprime loan crisis.

“Our claims against UBS will show that the manner in which the investments were sold to HSH Nordbank and UBSs subsequent management of the assets were clearly contrary to our interests,” said Bernhard Blohm, head of communications at HSH Nordbank.

HSH Nordbank claims that when it made the investment it was supposed to be “conservatively managed by UBS according to prudent investment objectives” but that UBS “appears to have condoned actions which benefited only itself, at the expense of its clients.” The bank said it repeatedly tried to speak to senior management at UBS about its concerns but that it was left with no option but to start legal proceedings.

German banks, like HSH Nordbank, piled on such complex debt products over the past decade to diversify their holdings and increase their income at a time when revenue growth in their home market was slowing.

For UBS, the claims come as senior managers prepare to face shareholders at an extraordinary shareholders meeting Wednesday in Basel, Switzerland, to discuss record write-downs at the bank due to its exposure to the global credit crisis through CDOs and other securities and the sale of a stake in the bank to a funds in Singapore and the Middle East. UBS was one of the financial institutions hardest hit by the credit crisis as it had to write down more than $18 billion.

But HSH Nordbank was also hit by the recent market turmoil - even without the portfolio it bought from UBS. This month, Nordbank provided financing to cover its \3.3 billion, or $4.9 billion, structured investment vehicle that uses short-term debt to invest in higher-yielding securities, to prevent a fire sale of the assets.

BUDAPEST: The monetary authorities here said Monday that Hungary would abandon a trading band on its currency, the forint, allowing it to float freely against the euro beginning Tuesday.

The National Bank of Hungarys surprise decision will eliminate the current exchange rate system, in which the forint was kept within a band of plus or minus 15 percent against the shared European currency.

The bank said the move was an important step in Hungarys aim to switch to the euro and would provide the bank more favorable conditions to get inflation under control. The current exchange rate system “does not contribute to anchoring long-term inflation expectations,” the central bank said in a statement announcing the new system.

The bank said its decision to introduce the new exchange rate system was made in agreement with the government.

Hungary has not set an official date for adopting the euro, but many analysts say 2014 is realistic.

Target dates announced earlier - which considered introducing the euro even before 2010 - were repeatedly scrapped as Hungarys economic performance and its macroeconomic indicators deteriorated.

To enter the so-called European Rate Mechanism II, the unions official two-year waiting room for euro hopefuls, a country must not exceed limits to its state budget deficit, inflation rate and debt level - conditions known as the Maastricht criteria.

While the central bank had forecast inflation to drop to an annual 3 percent by the second quarter of next year, it said that target now appears unattainable.

The central bank also said Monday that it was leaving its key interest rate - the two-week deposit rate for commercial banks - unchanged at an annual 7.50 percent.

NEW YORK: Cerberus Capital Management has been humbled in recent weeks by troubles at two of its larger investments, Chrysler and the mortgage lender GMAC.

Those companies problems are merely among the most prominent in a series of bumps hurting a giant in private equity. Cerberus is run by Stephen Feinberg and named after the mythological three-headed dog guarding the gate of Hades.

At the height of the private equity boom, Cerberus made big returns for investors by investing in companies like Vanguard Car Rental Group.

Other good bets it has made have been on investments in AerCap Holdings, based in the Netherlands, and Teleglobe International in Montreal.

But it has made some contrarian bets, like Chrysler, causing some to wonder if Cerberuss Midas touch is fading.

The latest hits came Friday.

GMAC and a subsidiary, Residential Capital, suffered large credit downgrades from Standard Poors. Cerberus bought a majority stake in GMAC from General Motors in 2006.

Scottish Re Group, a reinsurer into which Cerberus injected $300 million last May, said it would try to sell some units and cut costs to preserve capital and liquidity. The reason: Its business plan does not work.

“Cerberus has among the smartest, most connected people the private equity business has ever seen,” said Michael Holland, a money manager who runs Holland Company, and is a former partner at Blackstone Group, the private equity firm. “But it shows you the enormous challenges facing private equity right now.”

Cerberus said it remained “enthusiastic” about Chrysler, which it said was on track to exceed its long-term targets “on all key metrics.”

Last month, The Wall Street Journal quoted Cerberuss No. 2 executive, Mark Neporent, as saying the firm never commits more than 5 percent of its $26 billion under management to any one investment. That would limit risk.

But much of the attention has focused on investments that look unwell, went sour - or never happened.

Chrysler is a major focus, after Cerberus last August acquired an 80.1 percent stake from Daimler in a $7.4 billion transaction, taking on an estimated $18 billion of pension and health care liabilities. It installed the former Home Depot chief executive Robert Nardelli to run the automaker.

The Wall Street Journal reported in December that Nardelli had confirmed that he told employees in a meeting that month that Chrysler, which is cutting thousands of jobs, was “operationally” bankrupt.

In January, Chrysler sales declined 12 percent as demand fell for pickup trucks and sport utility vehicles. On Feb. 8, Chryslers vice chairman and president, Jim Press, said the automaker planned to shrink its dealer network and eliminate slow-selling models.

GMAC, which was once a profit center at GMs otherwise troubled operations, is another area of concern. Cerberus led a group that bought 51 percent of the company, which provided auto loans and mortgages.

But the housing crisis in the United States led to a $2.33 billion loss at GMAC in 2007, including a $4.35 billion loss at ResCap.

Standard Poors on Friday slashed GMACs and ResCaps credit ratings to medium “junk” status, to the same levels assigned by Moodys Investors Service. SP said ResCap might need more capital to avoid tripping its own loan covenants.

Feinberg, the Cerberus chief, acknowledged problems in his Jan. 22 letter.

“GMAC is an investment about which we have significant concerns,” he wrote. “If the credit markets continue to decline and we find ourselves in a prolonged environment of capital market shutdown, GMAC could run into substantial difficulty.”

Cerberus has stumbled before on mortgages. Last August, its Aegis Mortgage unit went bankrupt, becoming one of dozens of home loan providers to exit the industry since 2006.

Some deals have fallen apart altogether.

Cerberuss $1 billion agreement last year to buy HR Blocks Option One Mortgage subprime unit as demand for risky home loans collapsed.

And in a bigger blowup, Cerberus backed out of a $4 billion agreement to buy equipment renter United Rentals, a decision a Delaware court said it was within its rights to do.

“Walking away from the transaction was very difficult for us because we knew we would get criticized and there would be significant reputational fallout,” Feinberg wrote. “We stuck to our guns, and the truth prevailed.”

In the past six months, Blackstone, J.C. Flowers and Kohlberg Kravis Roberts are among private equity firms to also back out of mergers.

As a result, planned buyouts of such companies as the student lender Sallie Mae, the mortgage and vehicle fleet company PHH and the audio equipment maker Harman International Industries never closed.