Frankfurt (Business Emerge), August 16: In a recent development in the ongoing legal battle over Deutsche Bank’s acquisition of Postbank, plaintiffs have rejected the bank’s proposed settlement offer, terming it as insufficient. The settlement proposal aimed to resolve a series of lawsuits from shareholders who claimed they were underpaid during the takeover of Postbank, Germany’s largest bank.
The litigation, which has clouded Deutsche Bank’s reputation for years, saw a significant shift in April when a Cologne court appeared to side with the former shareholders. This turn of events forced Deutsche Bank to allocate €1.3 billion ($1.43 billion) in anticipation of potential payouts. Despite these provisions, the plaintiffs’ lawyer, Jan Bayer, criticized the bank’s offer, labeling it as a “crackhead” proposal that was “dead on arrival.”
Deutsche Bank’s attempted acquisition of Postbank, a financial institution deeply rooted in Germany’s postal system with millions of customers, began during the global financial crisis of 2008. The acquisition was initially seen as a strategy to solidify Deutsche Bank’s position in Germany by providing a stable income stream. However, it instead led to numerous customer complaints, increased regulatory scrutiny, and costly lawsuits.
A critical aspect of the proposed settlement was the bank’s offer of €36.50 per Postbank share to the shareholders. However, Bayer suggested that the offer was significantly lower than expected, estimating it to be well below 50% of the total claims. Deutsche Bank has not commented on the comparison between its offer and the €1.3 billion it has set aside for potential settlements.
The protracted lawsuits have been in and out of courts for years, with claims that Deutsche Bank had underpaid former Postbank shareholders. In response to the latest developments, Deutsche Bank issued a statement acknowledging that it is in ongoing settlement discussions with various plaintiff groups but refrained from commenting on the specifics of the offer.
Following the court’s recent inclination towards the plaintiffs’ stance, Deutsche Bank was compelled to abandon plans to reward its investors and repurchase its own shares. The financial giant subsequently reported a quarterly loss, ending a streak of 15 consecutive profitable quarters.