The Manchester Building Society, Britain’s 19th biggest building society, filed a £49m negligence claim against Grant Thornton, its former auditors.
The mutual said the claim was “for breach of contract, negligence and breach of statutory duty relating to audit services and advice” between 2006 and 2013. Specifically, it relates to alleged “hedge accounting” problems involving interest-rate swaps that the society claims led to its widely reported financial difficulties in 2013.
In April that year, after the problems with interest-rate hedging came to light, it was forced to raise £18m in new capital from rival lenders.
Later in 2013, it had to restate its 2012 accounts, turning an earlier reported £0.6m profit into a loss of £21.9m.
The negligence claim would go to court if a satisfactory agreement can’t be reached with Grant Thornton, the Manchester said. The auditors refused to comment, saying in a statement: “As a large professional services firm, there are inevitably occasions when we become involved in legal claims.”