Deutsche Bank reaches settlement with most Postbank claimants | Wilnesh News

Deutsche Bank Deutsche Bank has reached a settlement with nearly 60% of plaintiffs in a long-running lawsuit alleging that it underpaid when it acquired Postbank more than a decade ago.

Deutsche Bank said in a statement on Wednesday that it had reached a settlement of 31 euros ($34.53) per share with more than 80 plaintiffs as proposed by the bank. Deutsche Bank said this would allow Germany’s largest bank to free up capital and add 430 million euros to Deutsche Bank’s projected third-quarter pretax profit.

4:25 pm in London Deutsche Bank shares rose 3.95%, near their highest level in a month.

Shares in the bank fell sharply after the bank announced its second-quarter results on July 24, with the company reporting its first net loss in four years, mainly due to a €1.3 billion provision for the Postbank case.

That includes the largest individual plaintiffs, accounting for about a third of the claims, the bank said Wednesday.

A series of institutional and private investors have filed lawsuits against Deutsche Bank, claiming the bank underpaid fees. Multi-level collection Postbank is a German retail bank with millions of customers. The agencies merged in 2018.

The bank said settlements with other plaintiffs could have a “further positive impact on total provisions required for litigation.”

A Deutsche Bank spokesman said: “We are pleased with the settlement announced today, which significantly reduces the costs and risks of the PostBank acquisition litigation and has a positive impact on our earnings and capital position.”

“In the context of improvements to our capital program, we will review our distribution plans and discuss these plans with regulators as part of our ongoing dialogue. As before, we will continue to focus on delivering franchise momentum, operating performance and Return to shareholders.

The company said in its second-quarter results that it would not conduct a second share buyback this year and focus on accumulating excess capital.

JPMorgan analysts said in a note Thursday that they estimate the settlement will increase Deutsche Bank’s common equity tier 1 capital, a measure of the bank’s solvency, by about 10 basis points, which stood at 13.5% at the end of the second quarter.

“Overall, we view the settlement as positive and a move toward eliminating long-pending litigation issues,” they said.

They added that they do not expect the settlement to result in a second tranche of share buybacks in 2024.

JPMorgan said Deutsche Bank “needs to demonstrate continued capital generation to the market in order to accommodate increased dividends, taking into account a number of outstanding issues such as the European Central Bank’s industry-wide leveraged finance review”.

Postbank claims have dogged the bank for more than a decade. The Cologne Higher Regional Court dismissed all claims in the lawsuit in 2020, but this ruling was rejected by the German Federal Court in 2022 and remanded back to the Higher Regional Court for a new judgment.

Numerous claims remain pending.

Jan Bayer, a senior partner at law firm Bayer Kraus Huber, which represents about 50 mostly institutional claimants, said his clients had rejected the settlement offer. Bayer last week called the offer of 36.5 euros per Postbank share a “belated low price.”

Bayer told CNBC on Thursday that the acceptance had “no impact on any other claimants.”