Vestia, a Dutch housing corporation, lost €2.7B on interest rate swaps it didn't need

Vestia is the largest public housing corporation in the Netherlands, owning and renting approximately 78,000 homes and 8,000 other units. Based in Rotterdam, it is a stichting (foundation) that manages social housing for low-income residents.

Between 2010 and 2011, Vestia's treasurer Marcel de Vries built an enormous portfolio of interest rate derivatives — approximately €23 billion in notional value of swaps and complex forward-starting swaps. The stated purpose was to hedge against rising interest rates on Vestia's borrowing, but the scale was far beyond any reasonable hedging need.

When interest rates fell instead of rising, the derivatives incurred massive losses. The cost to unwind the toxic financial products exceeded €2.7 billion, nearly bankrupting the housing corporation. Banks involved included Deutsche Bank, Credit Suisse, Barclays, Citibank, and ABN AMRO.

De Vries had been bribed over eight years, receiving approximately €10 million in kickbacks from Deutsche Bank via an intermediary. He was jailed for 36 months for fraud and bribery, and ordered to repay €11.5 million. CEO Erik Staal resigned in January 2012. A parliamentary inquiry was conducted in 2013–2014. Vestia sued Deutsche Bank for €840 million and settled for €175 million.