Thursday 10 June 2021 11:12 am

Deutsche Bank set to take €100m hit after German court ruling

Deutsche Bank has said it anticipates to book a €100m charge in the second quarter after a court ruling allowed some clients to challenge higher fees. 

The German lender also expects to take a revenue hit by another €100m in the second and third quarter, finance chief James von Moltke said. 

The case was brought against Deutsche’s Postbank retail business with a judge ruling the bank gave itself too much power to change the terms and conditions. 

The judgment delivered in April means customers can claw back past price increases and the German regulator has warned it could see banks see half of their annual profit wiped out by compensation claims. 

The ruling comes as a blow to Deutsche which has recovered well from the pandemic, reporting its highest quarterly profit since 2014. In April the lender said it generated a net profit of €908m in the first quarter, compared with a €43m loss in the same period last year. 

This strong performance was largely down to its investment bank, which reported a 32 per cent rise in revenue, and its asset management division. 

Deutsche Bank suffered a setback earlier this year after its €3.4bn exposure to Archegos Capital, which collapsed last month after its leveraged bets fell through. However the bank said it was able to unwind its positions without taking any hits. 

Despite this volatility von Moltke, who spoke at the annual European Financials Conference, said despite the setback the bank was confident it can pass on higher costs and was prepared to lose retail clients over deposit fees. 

Separately it is facing difficulties following a probe into the alleged misselling of foreign exchange derivatives. The sudden departure of two veteran Deutsche Bank executives, Louise Kitchen and Jonathan Tinker, were linked to the investigation, the Financial Times reported.