Deutsche Bank Settles Bulk Of Postbank Disputes

Deutsche Bank has settled with 60 percent of the people involved in a legal battle over ten years regarding its purchase of Postbank. The firm noted that this resolution could lead to a €430 million increase in pre-tax profits in this year’s third quarter.

The leading lender in Germany said on Wednesday that it had agreed with over 80 plaintiffs involved in one of its longest-standing legal cases. The firm noted that this includes the largest individual plaintiff, who accounts for around a third of all claims.

Deutsche Bank Faces Accusations Of Underpaying For Postbank Shares

Deutsche Bank reported that it was accused of paying the plaintiffs too little in the 2010 acquisition of Postbank. Deutsche Bank stated that the notable progress in talks with plaintiffs could bring back a share buyback program that was earlier canceled.

According to the update, Deutsche Bank revealed that due to the progress in its capital plan, it will reassess its distribution plans and discuss them with regulators as part of continuous discussions. The settlements were agreed at €31 per Postbank share, accounting for roughly 45% of the provisions Deutsche Bank had reserved for the plaintiff involved in the deal.

The bank reported that in April, it surprised markets by setting aside a €1.3 billion provision for the case after a court in Cologne indicated it was prepared to rule to favor the plaintiffs. On Thursday, its shares increased by 3% to €14.43 by afternoon in Frankfurt.

The Bank Predicts That More Settlements Could Improve Financial Provisions

Deutsche Bank announced that additional settlement agreements with other plaintiffs could lead to more positive outcomes for the total provisions allocated for the litigation. Jan Bayer, who advocates for a group of plaintiffs who have not accepted a settlement offer, said the agreement would not affect the other claimant.

For 14 years, former Postbank shareholders have argued that Deutsche Bank did not pay enough for their shares. They believe that the bank had gained de facto control before it finished buying out the remaining minority investors. Deutsche Bank first acquired a stake in 2008 and had the option to increase it, which it did in three phases until 2010.

The claimants said Deutsche Bank failed to meet a German legal obligation to make a mandatory takeover offer to the remaining shareholders when Postbank’s shares were worth €57.25. Instead, the bank eventually paid only €25 per share.

The claims were first dismissed by Cologne courts in 2011 and 2012, but these decisions were later reversed by the Federal Court of Justice in Germany. Deutsche Bank lost a later trial in 2017 and appealed, which triggered a fresh round of legal battles.