The breakdowns at Postbank didn’t just upset customers. There is also criticism from the shareholders – especially since Deutsche Bank also has to set aside a lot of money for an old dispute.
The Postbank mess has brought Deutsche Bank management a lot of criticism from shareholders. “The problems with Postbank’s IT migration are an embarrassment. A bank must not leave its customers out in the cold like what happened at Postbank,” said fund manager Alexandra Annecke from Union Investment at the general meeting, which was again not considered Face-to-face event took place.
Deka representative Andreas Thomae said that the private customer bank had been “on fire” last year: “The many customer complaints in the course of the Postbank integration not only cost you money, but also your reputation.”
The transfer of Postbank’s customer business to Deutsche Bank’s computer systems last year did not work smoothly. At times, customers were unable to access accounts, construction financing was delayed, and people with accounts protected from seizure were temporarily unable to access urgently needed money. Because the problems were piling up, the financial regulator Bafin sent a special representative.
Both Supervisory Board Chairman Alexander Wynaendts and CEO Christian Sewing confirmed in their previously published speeches at the Annual General Meeting that in this case the bank had not lived up to its quality standards and had disappointed customers. It is clear that the bank has “even more work” to do to “further improve its customer service,” said Sewing.
Further trouble with the Postbank
However, further trouble has recently emerged for Germany’s largest financial institution in the Postbank matter: In a legal dispute with former Postbank shareholders that has been going on for years, the Cologne Higher Regional Court indicated that it could decide in favor of the plaintiffs. Deutsche Bank therefore set aside 1.3 billion euros as a precautionary measure – a burden on the consolidated result for the current year.
Essentially, the question is whether the compulsory severance payment for minority shareholders decided in 2010 was appropriate and whether Deutsche Bank did not already have de facto control over the Bonn institute before the public takeover offer for Postbank in 2010.
Deka representative Thomae was annoyed by the sudden provision for billions that the bank made public just one day after record-breaking quarterly results: “You have to let that melt in your mouth: 1.3 billion euros. Almost out of nowhere. How Could such a misjudgment have occurred on your part, Mr. Sewing?”
CEO Sewing emphasized: “We are still of the opinion that Deutsche Bank had no control over Postbank before the purchase agreement came into effect and also before the purchase agreement was approved by the antitrust authorities and Bafin.”
More than 50 percent chance of defeat
According to legal director Stefan Simon, a total of 46 civil proceedings with a total of 384 plaintiffs are pending surrounding the acquisition of Postbank between 2008 and 2010. Around 90 percent of the plaintiffs are international hedge funds and other institutional investors. The lawsuit amount currently amounts to around 662 million euros, plus interest, the total risk as of the end of March 2024 amounts to around 1.3 billion euros.
Until April 26, 2024, Deutsche Bank “continually assumed (…) that it would most likely win the legal dispute,” explained Simon. Therefore, no provision was made. However, in view of the latest statements by the Cologne Higher Regional Court, the bank’s lawyers came to the conclusion that “there is a probability of more than 50 percent that it will lose in the legal dispute.” Simon emphasized – also with a view to previous judgments in the matter in favor of the financial institution: “Deutsche Bank did not expect such a changed assessment of the factual and legal situation by the Cologne Higher Regional Court.”
Source: Stern
