Deutsche Bank, Algosaibi unit battle in NY court

* Allegation that foreign exchange swap was not completed

* Judge expects to rule by Dec. 9

By Jonathan Stempel

NEW YORK, Sept 23 (Reuters) - Deutsche Bank AG (DBKGn.DE)
and a banking unit of Saudi Arabia's Algosaibi family battled
in court on Wednesday over whether to throw out a $74.2 million
claim by the German bank, part of a flurry of lawsuits
involving billions of dollars and allegations of fraud.

New York State Supreme Court Justice Bernard Fried said he
expects to rule by Dec. 9 whether The International Banking
Corp bsc, a Bahrain bank whose controlling shareholder is the
Ahmad Hamad Algosaibi and Brothers conglomerate, did sufficient
business in New York to subject it to litigation in the state.

Several large Middle Eastern companies are caught up in a
variety of litigation amid a feud between Algosaibi and the
billionaire Maan al-Sanea, who married into the family.

Regulators and bankers are trying to address up to $22
billion of debt restructurings at Algosaibi and al-Sanea's Saad
Group [SAADG.UL]. Last week, Kuwait's Al Ahli Bank of Kuwait
KSC (ABKK.KW) sued Saad and al-Sanea for $125 million, alleging
breach of contract and fraud. [ID:nN23390314]

The issue at Wednesday's hearing was whether Deutsche Bank
can recover damages for TIBC's failure to make good on its
portion of two foreign exchange transactions, under which the
German bank agreed to swap $59.8 million for 40 million pounds
sterling.

A ruling favoring TIBC would free up assets that Deutsche
Bank attached after it sued in May, court papers show.

H. Barry Vasios, a partner at Holland & Knight LLP who
represents TIBC, said his client had only "incidental" contact
with New York, and that its correspondent banking activity in
the state is not relevant to Deutsche Bank's argument.

Urging Fried to look at the "totality" of circumstances,
Vasios said, "Our performance is entirely outside the U.S. The
deal was negotiated there. The deal was completed there."

Todd Marcus, a partner at Bingham McCutchen LLP who
represents Deutsche Bank, responded that TIBC actually has
substantial business in New York, sometimes involving billions
of dollars a month.

"This notion of a correspondent bank, I'm not buying it,"
he said. "This is where they have their account."

The bank's lawyers declined to comment after the hearing.

David Brodsky, a partner at Cleary Gottlieb Steen &
Hamilton LLP who represents Mashreqbank psc MASB.DU, which is
suing and being sued by the Algosaibi family, also argued at
Wednesday's hearing in favor of jurisdiction.

A Mashreq spokeswoman later said the Dubai-based bank
expects to prevail on its own claim against TIBC.

Bahrain's central bank seized TIBC in July, and later named
an external administrator to operate it.

Several Algosaibi-related proceedings are being held in New
York because some of the parties and claims are located there.

The case is Deutsche Bank AG v. The International Banking
Corp bsc, New York State Supreme Court (Manhattan), No.
601471/2009.
(Reporting by Jonathan Stempel, editing by Matthew Lewis)