(Oct 23): Deutsche Bank AG was ordered to increase payments to a group of former Postbank investors as part of a long-running share-valuation dispute that has already cost Germany’s biggest lender hundreds of millions of euros.
The Cologne Appeals Court on Wednesday upheld a previous ruling in favour of investors who were seeking a total of €100 million (RM467.24 million). The judgment is also likely to influence other litigation still pending in a lower court.
The legal clash dates back to Deutsche Bank’s acquisition of Postbank and the amount it offered in its 2010 takeover bid. At the time, Deutsche Bank promised €25 per Postbank share. The investors said they should have received €57.25 — the price the stock was trading at in 2008 when Deutsche Bank first bought shares of its then-competitor.
The Cologne court on Wednesday backed the plaintiffs’ arguments that via the agreements, Deutsche Bank effectively already controlled Postbank at that early stage. The lender had a say how Postbank used its voting rights regarding dividends, presiding Judge Christoph Wurm said when delivering the judgment. The bank was aware of the legal risks already in 2008 because the contracts had rules addressing it, the judge added.
In April, Deutsche Bank had set aside as much as €1.3 billion in legal provisions after the judges warned at a hearing they may find against the company. In August, it settled with a group of plaintiffs who represent 60% of the total claims. That agreement allowed it to reduce the provision to €547 million, the lender said earlier on Wednesday.
The lender said in a statement after the ruling that it’ll analyse the judgment adding that it booked provisions covering all outstanding claims accrued until now. Any additional impact would be limited to interest accruing currently at about €2 million per month, Deutsche Bank said.
Among the plaintiffs who settled earlier was Elliott Investment Management, which received nearly €200 million. In September, the bank also settled with two other smaller investors.
While in the current cases the plaintiffs seek a payout of €57.25 per share, other investors who have also sued claim the new payout should be €64.25 per share.
The court fight has been embroiling Deutsche Bank for more than a decade. The first case was already filed in 2010 and the litigation has seen various ups and downs. Germany’s top civil court already ruled twice on the dispute, in 2014 and 2022 — always sending the cases back to a lower court to examine more issues. In a previous round, the Cologne Appeal Court had dismissed the suits but the 2022 top court judgment changed its view.
The case is: OLG Köln, 13 U 231/17.