Deutsche Bank to make provision for Postbank suit that will hit Q2 profit

By Thomson Reuters Apr 26, 2024 | 4:09 PM

BERLIN (Reuters) – Deutsche Bank AG said a court ruling in a years-long litigation over its takeover of Postbank will require it to make a legal provision that will impact its second quarter and full-year profitability.

Germany’s flagship lender said that the Higher Regional Court of Cologne had on Friday assessed the claims of certain former Postbank shareholders that a higher offer price should have been paid for the 2010 takeover.

“During the hearing, the Court indicated that it may find elements of these claims valid in a later ruling,” the bank wrote.

“While Deutsche Bank continues to disagree strongly with this assessment, the court’s statements will impact Deutsche Bank’s estimation of the probability of a future outflow, resulting in a legal provision in the second quarter of 2024.”

This provision would impact Deutsche Bank’s second quarter and full-year profitability and capital ratios, it said.

The estimate of the full amount of all claims by the Postbank shareholders, including cumulative interest, is approximately 1.3 billion euros ($1.39 billion). A spokesperson said that was the ceiling for the provision, which had not yet been determined.

“Generally, management does not expect a significant impact on the bank’s strategic plans or financial targets,” it said.

In 2008, Deutsche Bank bought a stake in Postbank of just under 30 percent for 57.25 euros per share. As Deutsche Bank gradually increased its stake over the following years, the financial crisis was in full swing and Deutsche Bank’s offer for remaining shares halved, irking Postbank’s smaller shareholders.

The lawsuit has been bouncing around German courts since 2011.

($1 = 0.9350 euros)

(Reporting by Jyoti Narayan in Bengalur; Additional Reporting by Alexander Huebner in Munich; Writing by Sarah Marsh; Editing by Sandra Maler)