Tom Sims
FRANKFURT (Reuters) – Deutsche Bank warned that a protracted lawsuit alleging it underpaid for Postbank could cost Germany’s largest lender up to 1.3 billion euros ($1.39 billion).
Deutsche acquired simple Postbank during the financial crisis, seeking to expand its presence in Germany and gain a stable revenue stream after years of rapid international expansion.
Instead, Postbank has become the source of consumer complaints, regulatory scrutiny, labor disputes and now, possibly, an expensive lawsuit.
Below are details of Deutsche’s problems with Postbank:
WHAT IS POSTBANK?
Deutsche began acquiring Postbank, with its millions of customers and roots in the country’s postal system, during the 2008 global financial crisis.
Deutsche Bank now operates under two brands – the blue Deutsche Bank logo and the yellow Postbank marks – through hundreds of branches across Europe’s largest economy.
WHAT IS DEUTSCHE’S LATEST PROBLEM WITH POSTBANK?
Deutsche Bank unexpectedly announced on Friday that it would make provisions to offset possible claims in years-long litigation that it underpaid Postbank shareholders in its acquisition of Postbank.
Deutsche Bank, which said it “remains strongly opposed” to any notion that it underpaid, said it would commit an unspecified amount to the case.
The claims amount to about 1.3 billion euros in damages, Deutsche said, adding that the matter would impact its profitability in the second quarter and for the full year.
Deutsche, in a separate statement late Sunday, said it was too early to say whether it would undertake another share buyback in 2024, in light of the unexpected developments.
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He said he would “carefully evaluate” options for a possible settlement of the litigation.
HOW OTHER DID POSTBANK APPEAR IN THE NEWS?
Deutsche has been fighting for years to fully integrate Postbank, but last year said it had completed the final phase of integration.
But the glitches led to customers complaining that their accounts were frozen for weeks, prompting the regulator to monitor the cleanup and cut bonuses for some Deutsche executives.
Deutsche said most of the problem had already been solved, but more needed to be done.
WHAT ELSE?
While Deutsche deals with consumer complaints, it has been embroiled in a months-long wage dispute with thousands of Postbank workers demanding a 15.5% pay rise.
The fourth round of negotiations ended inconclusively, even after 20 days of strikes.
Union members are in the process of voting on possible further strikes.
Deutsche Bank declined to comment on the dispute.
($1 = 0.9324 euros)