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German lender Deutsche Bank (LSE:0H7D) has made significant progress in its long-standing Postbank litigation, reaching settlements with over half of the claimants involved. The bank now anticipates a notable boost of €430.0 million to its Q3 pre-tax profits as a result of these agreements.
On Wednesday evening, Deutsche Bank announced that it had successfully reached settlements with more than 80 plaintiffs, which represents approximately 60% of those engaged in the prolonged legal dispute. Among these settlements was a deal with the largest individual claimant, whose case represented around one-third of the total claims. This major settlement brings considerable relief to Deutsche Bank, which has been grappling with this issue for over a decade.
The terms of the settlements were set at €31 per Postbank share. This figure covers approximately 45% of the €1.3 billion provision that Deutsche Bank had previously set aside in April. This provision was established in anticipation of a likely favorable ruling for the plaintiffs, based on indications from a Cologne court at that time.
The successful resolution of these claims has significant implications for Deutsche Bank. The bank's statement noted that further settlements with additional plaintiffs could lead to even more positive adjustments to the total provisions related to this litigation. This development not only alleviates a long-standing financial burden but also provides a clearer path forward for the bank's financial reporting and strategic planning.
As a result of these developments, Deutsche Bank's shares have experienced a positive reaction. As of 11:15 BST, the stock was up by 2.78%, trading at €14.40 per share. This increase reflects investor confidence in the bank's improved legal standing and the potential for more favorable outcomes as additional settlements are finalized.
Overall, the progress in the Postbank litigation marks a significant milestone for Deutsche Bank, indicating a successful resolution to one of its most enduring legal challenges and a potential boost to its financial performance in the near term.