HSH Nordbank says alleged "fraudulent acts and wilful breaches of duty" by UBS led to a $275m fall in the value of a portfolio of credit derivatives sold to it and managed by the Swiss bank, according to a lawsuit filed in the US.

The German public sector lender accuses UBS of deli-berately selecting inferior collateral as part of a complex credit default swap, enabling UBS to profit from North Street 4, a collateralised debt obligation in which HSH invested. "UBS exploited the structure for its own ends, at HSH's expense," the lawsuit claims.