Germany’s biggest bank, Deutsche Bank, has suggested a deal to settle with shareholders who sued it for not paying enough for the purchase of Postbank. However, the lawyer representing the shareholders said on Friday that the amount offered is too little.
The lawyer, Jan Bayer, turned down the bank’s proposal, calling it a “crackhead” offer that will surely fail. He made it clear that the offer was not acceptable from the start.
Deutsche Bank Sets Aside $1.43 Billion For Settlements
Deutsche Bank said any settlement would be a big step in a long-running legal battle that has troubled the bank for years. This situation recently made the bank keep aside $1.43 billion (1.3 billion euros) in case they need to make a payment.
The bank revealed that it is in talks to settle with different groups of plaintiffs involved in the Postbank takeover cases. In response, Deutsche Bank added that it wouldn’t discuss the latest updates in the negotiations.
Speaking on the latest update, Deutsche Bank reported that it offered to pay 36.50 euros for each Postbank share as a key part of the deal. This amount is what they put on the table to settle the case with shareholders, hoping it would close the long-running dispute.
According to the update, the bank chose not to share how its offer compares to the 1.3 billion euros reserved for the case. Bayer, the plaintiffs’ lawyer, estimated that Deutsche Bank’s offer is way under half of the claims. The bank began acquiring Postbank, with its large customer base and links to the postal system, during the 2008 financial crisis.
The Bank’s Strategy To Strengthen Its German Presence Takes An Unexpected Turn
In 2008, Deutsche Bank wanted to strengthen its position in Germany with reliable income after years of fast global growth. However, Postbank led to customer complaints, regulatory attention, and costly legal battles. For years, lawsuits accusing Deutsche Bank of underpaying former Postbank shareholders lingered in the courts.
A surprising development occurred in April when a Cologne court appeared to favor the former shareholders, causing Deutsche to prepare for possible claims by setting aside funds. As a result, Deutsche abandoned its plans to reward investors, stopped buying back shares, and posted a loss for the quarter, breaking a 15-quarter run of profits.
The Cologne court is set to review the case next Wednesday and could make a ruling. It has asked the plaintiffs and Deutsche to try to settle. Bayer noted that he shared the offer with his clients and told them it was “too low.” He suggested they wait for the court’s verdict on Wednesday.