Bayerische Landesbank, the second- biggest German state-owned lender, sued Deutsche Bank AG (DBK) in New York state court over $810 million of residential mortgage- backed securities.

The suit, filed in state Supreme Court in Manhattan yesterday, accuses Frankfurt-based Deutsche Bank of fraud in connection with the sale of the securities, pools of home loans securitized into bonds that were a central part of the housing bubble that helped send the U.S. into the biggest recession since the 1930s.

“Deutsche Bank originated, purchased, financed and securitized exceptionally high-risk loans into these RMBS, all while internally disparaging the poor quality of these loans and the RMBS they backed as ‘pigs’ and ‘crap,’” lawyers for Munich- based BayernLB said in the lawsuit.

Deutsche Bank believes the claims are without merit and will “vigorously” defend itself, spokesman Duncan King said in a telephone interview. The Frankfurt-based bank is Germany’s biggest lender.

The case is Bayerische Landesbank v. Deutsche Bank AG, 651264/2012, New York state Supreme Court (Manhattan).

To contact the reporter on this story: Chris Dolmetsch in New York at cdolmetsch@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net