A Deutsche Bank branch in the financial district of Frankfurt, Germany, on May 6, 2022.
Alex Kraus | Bloomberg | Getty Images
A lawyer representing plaintiffs in a long-running case against Deutsche Bank on Friday slammed a proposed settlement from the German lender as a “late low ball” offer.
The crux of the challenge against Deutsche Bank is that it underpaid for its acquisition of German retail banking giant Postbank in the late 2000s.
Legal action over the multi-stage deal has been rumbling on since 2010. Claimants number in the hundreds in total, with various suits in process from both institutional and private investors.
Deutsche Bank on Thursday afternoon offered claimants a settlement of 36.50 euros ($40.12) per Postbank share, Jan Bayer, senior partner at law firm Bayer Krauss Hueber, told CNBC. Claimants have until Monday to respond.
The news was first reported by Reuters on Friday.
A hearing on the Postbank case is due to take place at the at the Higher Regional Court in Cologne on Wednesday.
“This tactic (a late low ball roll-over offer) has been planned for months despite statements of the bank to the contrary and our warning months ago that it bears the risk of not working,” Bayer told CNBC by email.
He added that the offer was subject to acceptance by all claimants, one of whom had already rejected it. This implies that the settlement deal is unlikely to go through, unless conditions change.
“The bank’s goal of avoiding the court decision on Wednesday is doomed, and any settlement seems remote,” Bayer said, adding that the timing of an “unannounced offer… in the middle of the holiday season” meant the law firm was not even certain it could contact all claimants by the deadline.
Bayer Krauss Hueber is representing around 50 predominantly institutional claimants in various proceedings surrounding the case, who Bayer said are making around 1 billion euros in claims.
A Deutsche Bank spokesperson told CNBC by email on Friday: “As we’ve stated in the past, we are in settlement discussions with various groups of plaintiffs within the several Postbank takeover proceedings. We cannot comment further on the status of these talks.”
The Postbank litigation has weighed on the recent performance of Germany’s biggest lender. In its second-quarter results published last month, Deutsche Bank reported a net loss attributable to shareholders for the first time in four years, largely due to a 1.3 billion euro provision it made for Postbank cases. Deutsche Bank shares tumbled on the news at the time, but are up nearly 12% in the year to date as of Friday, according to LSEG data.
In a previous lengthy statement on the case released in April, Deutsche Bank said the assertion of plaintiffs — that the bank was obligated to make a takeover offer at a higher price — had been “successfully disputed” adding that the lender believed this claim was “invalid.”
The Higher Regional Court of Cologne in 2020 dismissed all claims in the proceedings, but this ruling was set aside by Germany’s Federal Court of Justice in 2022 and sent back to the Higher Regional Court for a new decision.