Deutsche Bank faces new €740 million claim with investors

Investors are suing Germany's biggest lender Deutsche Bank for €740 million, alleging they were underpaid for shares in subsidiary Postbank, local media reported on Wednesday.

Deutsche Bank faces new €740 million claim with investors
The Deutsche Bank logo behind the Postbank logo in Bonn. Photo: DPA.

At the heart of the suit is the question of when Deutsche took control of Postbank from its previous owner, logistics firm Deutsche Post.

The investors argue that Deutsche Bank was already in de facto control of Postbank two years before it launched a full takeover of the bank.

“Deutsche Bank intervened significantly in Postbank's business and took over control” as early as 2008, two years before it bought out the plaintiffs' shares, their Munich-based lawyer Oliver Krauss told business weekly WirtschaftsWoche.

The shareholders say they should therefore have been paid the value of their stock as it stood in September 2008 – around €64 per share – when Deutsche controlled just 30 percent of Postbank, rather than the €25 they received in the full takeover two years later.

Some 31 German and international investors are involved in the suit with claims totalling around €740 million.

According to court documents seen by WirtschaftsWoche, the plaintiffs accuse Deutsche Bank of striking “numerous contracts and agreements, some of them secret” with Postbank's former owner Deutsche Post in 2008.

They allegedly included giving up risky financial market activities in favour of retail banking, details of a capital increase at Postbank, personnel changes in the executive and supervisory boards, and the decision not to pay out a dividend in 2008.

Meanwhile, Deutsche Post put its Postbank shares at Deutsche Bank's disposal for trading and agreed to use its voting rights to back the financial titan's plans for the subsidiary.

Such agreements helped both sides weather the years after the financial crisis, the plaintiffs argue, saving Deutsche Post from losing money on its investment and offering more flexibility to Deutsche Bank as it battled to right itself.

“We believe the claims made in the suit are unfounded,” a Deutsche Bank spokesman told AFP.

 A fresh legal suit is unwelcome news for Deutsche, which in recent years has made clearing up old entanglements a priority as part of a wider restructuring.

It has paid out billions of euros in fines and compensation over some of the highest-profile cases like interest-rate fixing or mortgage-backed securities linked to the financial crisis, but remains a target in thousands

Shares in Deutsche were largely untroubled by news of the suit Wednesday, losing 0.2 percent to trade at €15.92 ($19.14) around 1250 GMT, against a DAX index of leading German shares up 0.4 percent.


Deutsche Bank set ‘to cut ties with Trump’

Deutsche Bank will cease its longstanding relationship with outgoing US president Donald Trump, The New York Times reported on Tuesday.

Deutsche Bank set 'to cut ties with Trump'
Deutsche Bank's headquarters in Frankfurt. Photo: DPA

Deutsche Bank was Trump's primary lender for two decades, and he owes the institution more than $300 million, according to the newspaper, which cited an unnamed source as saying the German lender “has decided not to do business with Mr. Trump or his company in the future.”

Deutsche Bank declined to comment to AFP.

The move comes on the heels of last week's violent attack on the US Capitol by Trump supporters at the president's incitement, and follows steps taken by other companies to cut ties with Trump and his businesses.

READ ALSO: Trump under investigation for Deutsche Bank ties

Christiana Riley, head of Deutsche Bank's US division, called the violent
siege on the Capital “a dark day for America and our democracy” in a post on LinkedIn last week.

“We are proud of our Constitution and stand by those who seek to uphold it to ensure that the will of the people is upheld and a peaceful transition of power takes place,” Riley said.

“It is my hope that these shocking events will result in a reinvigoration
of the principles our nation was built upon.”

Trump's relationship with Deutsche Bank has sparked numerous probes in the United States, including in New York, where the Manhattan District Attorney is investigating whether Trump committed financial crimes as he sought loans.

READ ALSO: 'Worlds between us': What Trump's German family's town thinks of him today