Deutsche Bank: big provision in Postbank case

(CercleFinance.com) - The German bank Deutsche Bank announced on Friday that it would have to make a heavy provision in its accounts following a favourable court ruling.


In a ruling handed down on Friday, the Cologne Higher Regional Court ruled in favor of certain Postbank shareholders, who felt that they should have been paid an improved price in 2010 at the time of Deutsche Bank's takeover bid.

Deutsche Bank explains that this decision increases the likelihood of future financial compensation, which will lead it to book a provision of around E1.3bn in its Q2 results.

The group estimates the impact of this reserve on its minimum and mandatory CET1 (Common Equity Tier 1) capital ratio at around 20 basis points, or 13.25%.

Deutsche warns, however, that it is currently impossible to determine the final financial implications of the case.

It's a pity that the recent improvement in its operating performance and the existence of a buoyant environment are being overshadowed by a legal dispute dating back several years, RBC analysts lamented this morning.

More concretely, the teams at Barclays and UBS are wondering whether these unexpected expenses might not put the brakes on Deutsche Bank's plans to distribute capital to its shareholders.

The German financial group itself admitted at the weekend that it was still too early to know whether its second tranche of share buybacks planned for this year would actually be implemented.

UBS warns that it no longer expects this second operation to be completed, and are simply counting on the finalisation of the E675m package currently in progress.

Following these announcements, Deutsche Bank shares fell by almost 5% on Monday morning on the Frankfurt Stock Exchange, posting by far the biggest drop on the DAX index.


Copyright (c) 2024 CercleFinance.com. All rights reserved.