Deutsche Bank shares rise 4%

Deutsche Bank has resolved claims from nearly 60% of the plaintiffs in a protracted legal battle over alleged underpayment related to its acquisition of Postbank over a decade ago.

On Wednesday, Deutsche Bank announced it had settled with over 80 plaintiffs, agreeing to a payout of 31 euros ($34.53) per share, as proposed by the bank. This settlement will enable Germany’s largest lender to disburse the funds and increase its projected third-quarter pretax profit by 430 million euros.

Key points:

1. Deutsche Bank has settled with almost 60% of the plaintiffs in a prolonged legal case alleging that the bank underpaid for its Postbank acquisition over a decade ago.
2. The settlements will enable Deutsche Bank to release 430 million euros in provisions set aside for the case.
3. Many cases are still pending, and a lawyer representing a group of institutional investors said that the settlement does not impact other claimants.

Deutsche Bank settles 60% of claims in long-running legal dispute

Suits were brought against Deutsche Bank by a range of institutional and private investors claiming that it underpaid in its multistage acquisition of Postbank, a German retail bank with millions of clients. The institutions merged in 2018.

In April, Deutsche Bank set aside financial reserves after an appeals court indicated it might rule in favor of the plaintiffs.

Shareholders have expressed frustration, arguing that Deutsche Bank should have made a fair offer for their assets when it first acquired a stake in Postbank in 2008.

At that time, Postbank’s shares were valued at €57.25, but their value had declined by the 2010 takeover.

Claims against Deutsche Bank were initially dismissed in court in 2011 and 2012, though these decisions were later overturned by Germany's Federal Court of Justice.

In 2017, Deutsche Bank lost a trial related to the same issue but subsequently appealed the decision, leading to a new wave of lawsuits.

Deutsche Bank shares were up

Deutsche Bank (NYSE) shares rose 3.2% in afternoon trading in Frankfurt after the bank announced it anticipates releasing approximately €430 million ($479 million) in reserves during Q3. This reserve release is tied to settling claims related to its acquisition of Postbank over a decade ago.

The bank has reached settlements with over 80 plaintiffs, covering nearly 60% of the claims in the litigation concerning the Postbank takeover. Former Postbank shareholders had challenged the offer price they received. The settlements are based on Deutsche Bank's proposed amount of €31 ($35) per share.

"Against the backdrop of this improvement to our capital plan, we will review our distribution plans and discuss these with our regulators as part of our ongoing dialogue," Deutsche Bank said on Wednesday.

The bank estimates that the settlement agreements finalized to date will consume approximately 45% of the total provisions set aside for the claims covered by these agreements. The remaining provisions related to these specific plaintiffs will be released. Deutsche Bank anticipates this will boost its Q3 pretax profit by around €430 million.

In April, Deutsche Bank disclosed that it had set aside €1.3 billion in provisions related to its 2010 acquisition of Postbank. In July, the bank decided to delay seeking additional stock buyback authorization due to the anticipated costs of resolving the Postbank claims.

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