Late Postbank purchase sequence - Deutsche Bank writes loss due to billions-worth position
The takeover of Postbank over a decade ago has had costly consequences for German Bank. A billion-dollar settlement in a protracted legal dispute with former Postbank shareholders resulted in a loss of 143 Million Euro for the bank in the second quarter. The Frankfurt-based Dax group announced this. It was the first quarterly loss since the beginning of 2020.
A year ago, the Deutsche Bank had earned 763 Million Euro. In daily business, it performed slightly better than expected: Without the Postbank settlement, there was a pre-tax profit of 1.7 Billion Euro - compared to 1.4 Billion Euro in the previous quarter.
Long Shadow of the Postbank Takeover
The bank had already announced at the end of April that the majority takeover of Postbank in 2010 could have costly consequences. In a legal dispute that has been running for years with former Postbank shareholders, the Cologne Higher Regional Court (OLG) indicated that it could rule in favor of the plaintiffs. The Deutsche Bank therefore set aside 1.3 Billion Euro precautionarily - a burden on the way to the targets.
At the core of the matter is the question of whether the 2010 settlement with the minority shareholders was fair and whether the Deutsche Bank did not already have effective control over the Bonn institution before the public takeover offer for the Postbank in 2010. If there is no out-of-court settlement between the parties, the Cologne Regional Court will decide on August 21.
Investment banking strong in the second quarter
In operational business, things went well for the Deutsche Bank. The revenues, i.e. the bank's total income, grew by 2% to 7.6 Billion Euro. The investment banking sector in particular showed strong growth. There, revenues increased by 10% compared to the previous year-quarter to 2.6 Billion Euro. The growth came mainly from the business with advisory services and the issuance of securities, which doubled the revenues.
Before taxes, the profit in the second quarter was 411 Million Euro. "This is the best result in a second quarter in the past 13 years," wrote CEO Christian Sewing in a letter to employees, which the bank published. "We are still on a good course to achieve our goals for 2025 – including the planned distribution to our shareholders."
The strategic plans or financial targets of the bank were not affected by the Postbank settlement, confirmed the Deutsche Bank. It reaffirmed its targets for the current and coming year. "We are on track to achieve the planned earnings of around 30 Billion Euro in total for the year," wrote Sewing. The targets for the end of 2025 were also kept in mind – especially a return on equity of more than 10%.
Much turmoil around Postbank
With the takeover of the customer-oriented Postbank, the Deutsche Bank wanted to become independent of the volatile investment banking business. However, Postbank caused negative headlines time and again in recent years. Chaos during the transfer of the customer business to the computer systems of the Deutsche Bank in the previous year caused problems for many Postbank customers. They could not access their accounts, mortgage financing was delayed. This led the financial supervisory authority BaFin to intervene, sending a special representative. The Postbank chaos also had consequences for the Deutsche Bank board: The bonus for the business year 2023 was reduced for the CEO.
- The Cologne Higher Regional Court (OLG) is currently involved in a legal dispute between Deutsche Bank and former Postbank shareholders regarding the fairness of the 2010 settlement and Deutsche Bank's control before the public takeover offer.
- The German Bank, headquartered in Frankfurt, acknowledged the potential financial impact of the Postbank takeover, setting aside 1.3 Billion Euro as a precautionary measure.
- In the aftershow of the legal dispute, Postbank's acquisition by a German Bank in 2010 has been a point of contention, with financial implications totaling billions of Euros.
- The takeover of Postbank by a German Bank, aimed at independence from the investment banking sector, has become a source of turmoil, resulting in negative headlines and regulatory intervention.
- Afterplay of the Postbank takeover by a German Bank has led to various repercussions, such as a lawsuit, reductions in bonuses, and challenges to the bank's goals and targets.
- Quarterly financial reports from the German Bank show a significant loss, attributed in part to the Postbank settlement, resulting in a $1.3 billion reserve on their books.
- The former Postbank, now a part of a German Bank, has witnessed significant changes since the takeover, including operational issues, legal disputes, and potential consequences for future earnings and strategic plans.
