Banks Deutsche Bank posts loss due to Postbank provision

Germany's largest bank has to set aside billions in a protracted legal dispute over the Postbank takeover. This has had a negative impact on the second quarter. Before taxes, however, there is a profit.

The takeover of Postbank more than ten years ago has had an expensive aftermath for Deutsche Bank. A billion-euro provision in a protracted legal dispute with former Postbank shareholders put Deutsche Bank in the red in the second quarter. The Dax group announced a loss of 143 million euros in Frankfurt. It was the first quarterly loss since the beginning of 2020.

A year ago, Deutsche Bank had still earned 763 million euros. In contrast, day-to-day business went somewhat better than analysts expected: excluding the Postbank provision, pre-tax profit amounted to 1.7 billion euros - compared to 1.4 billion euros in the same quarter of the previous year.

Long shadow of the Postbank takeover

The bank had already announced at the end of April that the majority takeover of Postbank in 2010 could have expensive consequences. In a long-running legal dispute with former Postbank shareholders, the Cologne Higher Regional Court (OLG) indicated that it could rule in favor of the plaintiffs. Deutsche Bank therefore set aside 1.3 billion euros as a precautionary measure - a burden on the way to the annual targets.

At the heart of the case is the question of whether the compulsory compensation for minority shareholders agreed in 2010 was appropriate and whether Deutsche Bank did not already have de facto control over the Bonn-based bank before the public takeover bid for Postbank in 2010. If no out-of-court settlement is reached between the parties, the Cologne Higher Regional Court will decide on August 21.

Investment banking strong in the second quarter

In contrast, Deutsche Bank's operating business performed well. Earnings - i.e. the bank's total income - grew by two percent to 7.6 billion euros. The Group made particular gains in investment banking. Income there rose by ten percent to 2.6 billion euros compared to the same period last year. The growth came mainly from the advisory business and the issuing of securities, which doubled income.

Pre-tax profit in the second quarter totaled 411 million euros. "This is the best result in a second quarter for 13 years," wrote CEO Christian Sewing in a letter to employees published by the bank. "We remain well on track to achieve our targets for 2025 - including the targeted distribution to our shareholders."

Deutsche Bank emphasized that the Postbank provision has no impact on the bank's strategic plans or financial targets. It confirmed its targets for the current and coming year. "We are on track to achieve around 30 billion euros in income for the full year as planned," wrote Sewing. The targets for the end of 2025 are also firmly in sight - in particular a return on tangible equity of more than 10 percent.

Much unrest around Postbank

With the takeover of Postbank, which focuses on private customers, Deutsche Bank wanted to become less dependent on the volatile investment banking business. However, Postbank has repeatedly made negative headlines recently. For example, chaos during the transfer of customer business to Deutsche Bank's computer systems last year annoyed many Postbank customers. At times, they were unable to access their accounts and construction financing was delayed. This prompted the financial supervisory authority Bafin to send a special commissioner. The Postbank chaos also had repercussions for the Deutsche Bank Management Board: it received less bonus for the 2023 financial year.

SDA