A logo is on display above the headquarters of Deutsche Bank AG in the Aurora Business Park in Moscow, Russia.
Andrey Rudakov | Bloomberg | Good pictures
Deutsche Bank Nearly 60% of the plaintiffs have reached settlements in a long-running case accused of underpaying the German lender for its takeover of Postbank a decade ago.
In a Wednesday statement, Deutsche Bank said it had reached agreements with more than 80 plaintiffs for a settlement of 31 euros ($34.53) per share, as the bank had proposed. It said it would allow Germany’s biggest lender to release funds and boost Deutsche Bank’s expected third-quarter pre-tax profit by 430 million euros.
Deutsche Bank shares were up 2.96% at 11:48 a.m. in London, hitting a one-month high.
Shares fell sharply following the bank’s second-quarter results, published on July 24, in which it posted its first net loss in four years, largely due to a 1.3 billion euro ($1.45 billion) provision for Postbank litigation.
That includes the largest individual plaintiff representing a third of the claims, the bank said Wednesday.
Several institutional and private investors filed lawsuits against Deutsche Bank alleging underpayment. Multi-stage acquisition Postbank, a German retail bank with millions of customers. The companies were merged in 2018.
Deutsche Bank share price.
“If Deutsche Bank enters into settlement agreements with additional plaintiffs, this may have further positive impacts on the overall terms taken for the case,” Deutsche Bank said.
These claims have been pending with the bank for over 10 years. The Higher Regional Court of Cologne dismissed all claims in 2020, but the decision was overturned by Germany’s Federal Court of Justice in 2022 and sent back to the Higher Regional Court for a new decision.
A portion of the claims are pending.
Jan Bayer, a senior partner at law firm Bayer Krauss Hueber, who represents about 50 major corporate claimants, said his clients rejected the settlement. Bayer called 36.5 euros a Postbank share a “late low ball” last week.
Bayer told CNBC on Thursday that the acceptance had “no effect on any other claimant.”
Analysts at JPMorgan estimated in a Thursday note that the settlement would add about 10 basis points to Deutsche Bank’s common equity Tier 1 capital — which stood at 13.5% at the end of the second quarter.
“Overall, we view this settlement as positive, moving in the direction of clearing the long pending case,” they said.
They do not expect the settlements to lead to a second tranche of share buybacks this year, which the bank previously announced in its second-quarter results that it was unlikely to do.
Deutsche Bank “will need to demonstrate current capital formation to the market to be comfortable with increased payments, and certain additional requirements.” [European Central Bank]’s industry-wide leveraged fund review,” JP Morgan said.
