Bank breaches duty of care with interest rate swaps: informed too late and too vaguely

Duty of care and duty to warn in interest rate swaps

Bank advises entrepreneur, unprompted, to enter into three interest rate swaps without adequate warning

A recycling and road-construction company entered into three interest rate swaps with its bank between 2007 and 2012, on the bank's advice. The company had not asked for them — for the first swap, a bank adviser came forward with the proposal shortly after the company had obtained a €4 million credit facility, including a 25-year Euribor loan of €3 million. The company had no knowledge whatsoever of derivatives.

The first swap followed in January 2007 at a fixed rate of 4.35%, the second in September 2007 at 4.73%. In 2012, on the bank's proposal, both were replaced by a third swap at 4.06%, intended to reduce costs. When the banking relationship was terminated in 2018, the bank charged the company the negative value of the swap — €240,000.

In 2016 the company held the bank liable for breach of its duty of care. An advance of €100,000 under the Uniform Recovery Framework for Interest Rate Derivatives (Uniform Herstelkader Rentederivaten) was reclaimed by the bank and repaid after no response was given to the final offer. The district court dismissed the claim, but the Amsterdam Court of Appeal set that judgment aside: the bank had fallen short in its contractual duty of care when entering into all three interest rate swaps.

Court of appeal: risk information on interest rate swaps too late and too vague for an entrepreneur without expertise

The court of appeal held at the outset that the bank had acted as an unsolicited adviser — the company had already received the credit it had requested when the adviser called. That advisory role triggers the special duty of care. According to settled case law of the Supreme Court, an interest rate swap is a risky financial product. The bank bears a special duty to warn, the scope of which depends on the counterparty's expertise.

For the first swap in January 2007, the risk information was provided only the day after the contract was concluded. The product information sheet stated only in general terms that a swap could acquire a negative value, without explaining how that value was actually determined. Too vague, the court of appeal held, for an entrepreneur without financial knowledge. As a result, the company was deprived of the opportunity to form its own view and to seek external advice.

For the second swap, more or less the same information was provided, supplemented by a PowerPoint presentation that set out the disadvantages of swaps in "general and vague terms." The court of appeal considered that insufficient as well. The company entered into the third swap in 2012 from what the court of appeal called a coerced position: early termination would have meant paying the negative value to the bank. Refinancing was the only realistic option — there was no genuine choice.

The bank's limitation defence based on Section 3:310 DCC also failed. Although the company had indeed complained around 2010 about the high costs, it did not have the specific knowledge to understand that it had a legal claim against the bank. Dissatisfaction is not the same as actual awareness of both the damage and the liable party. The interruption letter of February 2016 was timely. The contributory negligence defence also came to nothing: a party that has not been adequately warned is entitled to rely on the information the bank provides.

What does this mean for entrepreneurs who took out interest rate swaps?

This judgment confirms that the timing of information provision is crucial. Risk information that is not provided before the contract is concluded comes too late — the entrepreneur is deprived of the opportunity to seek external advice. Banks that advise non-professional parties on derivatives must give concrete and comprehensible warnings before the contract is concluded, tailored to the specific client's level of knowledge.

For entrepreneurs who at the time took out interest rate swaps on their bank's advice, the judgment is relevant to the question of whether a claim is still possible. The court of appeal applies a strict standard for the start of the limitation period: dissatisfaction about costs is not the same as actual awareness of a legal claim. A party without financial expertise need not understand any earlier that the bank fell short. Timely interruption keeps the claim alive.

The company had not responded to the final offer of €100,000 under the Recovery Framework — the advance was reclaimed by the bank — and continued to litigate. The court of appeal referred the assessment of damages to separate proceedings to assess the damages. For entrepreneurs who let the Recovery Framework offer pass or considered it inadequate, this judgment confirms that the civil route may remain open. See also the analysis of the notary's duty of care.

Amsterdam Court of Appeal 2 December 2025, ECLI:NL:GHAMS:2025:3232.

Cited case law

Supreme Court: ECLI:NL:HR:2019:1046

Courts of Appeal: ECLI:NL:GHAMS:2025:3232

Juriaan de Vries — a lawyer at Prime Law, specialising in corporate and commercial litigation. See the disclaimer.

See also

• Banking duty of care
• Supreme Court: contractual interest of 1.5% per month may be unacceptable
• Six days is too short: court of appeal warns notaries who informed an heir too late
• Web shop not delivered after a year: district court rescinds the agreement