Deutsche Bank shares slip as lender faces fresh Postbank litigation worries

Investing.com -- Shares in Deutsche Bank AG (NYSE:DB) NA O.N. (ETR:DBKGn) were lower in mid-afternoon European trading on Monday on news that the lender would set aside a provision to help account for potential claims in a lawsuit regarding its 2010 purchase of domestic peer Postbank.

On Friday, the German bank warned that it faced claims amounting to approximately 1.3 billion euros due to the long-running litigation, which involves how much it paid to buy Postbank.

Deutsche Bank did not say how much it had set aside in provisions, but noted that the move would impact its profits in the second quarter and current financial year. Last week, Deutsche Bank had reported its highest quarterly profit in 11 years in the first three months of 2024.

Over the weekend, the company said it would now "carefully assess" its options for a possible settlement, adding that it was too early to see if it would be able to conduct another share buyback this year.

In a note to clients, analysts at Morgan Stanley said that while they expected Deutsche Bank shares to react negatively to the developments, they continue to view the bank as "profitable, and capital generative, with a good earnings momentum, thanks to performance in the [investment banking division], which is showing cost discipline, and with management's commitment to deliver returns well ahead of consensus."