By Tom Sims
FRANKFURT (Reuters) -Deutsche Bank shares were 5% lower early on Monday after news that a long-running lawsuit could cost Germany’s largest lender up to 1.3 billion euros ($1.39 billion).
The issue is a blow to Deutsche, which last week posted better-than-expected earnings that boosted its shares. It is the latest in a string of problems that have arisen from its purchase of the no-frills Postbank.
Analysts at JPMorgan and RBC cut their target prices for Deutsche Bank, despite rating the bank “overweight” and “outperform”, respectively.
“It is disappointing that improved performance and a constructive operating environment are overshadowed by legacy litigation from a long time ago,” RBC analysts wrote in a note to clients.
Deutsche’s shares have made steady gains since steep falls early last year in the wake of bank rescues in Switzerland and the United States. They are up 27% this year.
Deutsche Bank late on Friday unexpectedly announced that it would make a provision to offset possible claims in litigation in the suit following oral arguments at a hearing earlier in the day.
It said it “continues to disagree strongly” with any view that it underpaid. The bank did not specify the amount it had set aside but noted that claims totalled about 1.3 billion euros.
Deutsche said the provision would impact its second-quarter and full-year profitability.
In a separate announcement late on Sunday, Deutsche said it would “carefully assess” options for a possible settlement and that it was too early to tell whether it would conduct another share buyback in 2024 in light of the turn in events.
($1 = 0.9325 euros)
