The logo is on display atop Deutsche Bank’s headquarters at Aurora Business Park in Moscow, Russia.
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Deutsche Bank The German bank has reached settlements with about 60 percent of plaintiffs in a long-running lawsuit that claims it underpaid Postbank when it bought the company more than a decade ago.
Deutsche Bank said in a statement on Wednesday it had reached a settlement with more than 80 plaintiffs for 31 euros ($34.53) a share, as proposed by the bank, which it said will free up capital for Germany’s largest bank and boost its forecast third-quarter pretax profit by 430 million euros.
Deutsche Bank shares were up 2.68% as of 1:22 p.m. London time, near their highest level in a month.
The bank’s shares fell sharply after it reported second-quarter results on July 24, reporting its first net loss in four years, mainly due to a €1.3 billion provision for the Postbank deal.
The bank said Wednesday that it also included the largest individual plaintiff, accounting for about a third of the claims.
Institutional and individual investors have filed a lawsuit against Deutsche Bank, alleging that the bank underpaid them. Multi-stage acquisition It is a subsidiary of Postbank, a German retail bank serving millions of customers. The two banks merged in 2018.
Deutsche Bank stock price.
The bank said settlement agreements with additional plaintiffs “may have a further favorable impact on the total amount of provisions taken 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 takeover litigation and will have a positive impact on the bank’s earnings and capital position.”
“With our improved capital plan in place, we are reviewing our dividend plan and will consult with regulators as part of our ongoing dialogue. As always, we remain focused on franchise momentum, operational performance and returning profits to shareholders.”
The company said in its second-quarter earnings report that it would not repurchase shares for a second time this year as it focused on building excess capital.
JPMorgan analysts said in a Thursday report that the settlement would boost Deutsche Bank’s common equity Tier 1 capital, a measure of a bank’s solvency, by about 10 basis points, from 13.5 percent at the end of the second quarter.
“Overall, we view this settlement as a positive step in resolving some of these long-standing litigation issues,” they said.
He added that he does not expect the settlement to lead to a second share buyback in 2024.
“For the market to be convinced of a dividend increase, the company needs to demonstrate continued capital generation. [European Central Bank]”An industry-wide review of leveraged finance,” JPMorgan said.
The Postbank case has been dragging on the bank for more than a decade. In 2020, the Cologne Higher Regional Court dismissed all claims in the proceedings, but this decision was set aside by the German Federal Supreme Court in 2022 and remanded the case back to the Higher Regional Court for a new decision.
The majority of claims remain unpaid.
Jan Bayer, a senior partner at the law firm Bayer Krauss Huber, which represents about 50 plaintiffs, mostly corporations, said his clients had rejected the settlement offer. Bayer last week called its offer of 36.5 euros per Postbank share a “late and low offer.”
Bayer told CNBC on Thursday that the acceptance “does not affect other plaintiffs.”
