Lovells attacks UBS over split capital trusts debacle

Irish property group Real Estate Opportunities (REO) has instructed Lovells to advise on legal action taken against UBS in relation to the collapse of the split capital trust market.

The House of Lords has ordered UBS to hand over documents relating to its involvement in the split capital trusts debacle.

UBS is being sued by REO over allegations that the bank is responsible in part for losses on its split capital portfolio.

REO was hit hard after its portfolio, which was established by UBS and Aberdeen Asset Management, accumulated debts in excess of £165m after the collapse of the trusts.

Lovells partner Graham Huntley said: "It's confirmed that the case against UBS is proceeding and we regard the documents that have been disclosed as very relevant."

In 2001 the trusts, which include shares with varying levels of risk, experienced massive losses due in part to the dramatically unstable stock market. Aberdeen Asset Management paid out £49.7m to settle allegations in connection with REO.

UBS was told by the Lords that it would not be able to keep certain information regarding the trust with REO confidential and was ordered to give its bankers' testimony to the property group by 6pm on 30 March.

Evidence from the Financial Services Authority will be heard in court. The trial is expected to begin in May.

Huntley said: "The trial will be somewhat shorter as a result of the settlement with Aberdeen Asset Management. We've been advising REO since late 2003 and this is the first time we've worked with the company."

Mayer Brown Rowe & Maw partner David Allan is advising UBS. He declined to comment.