FRANKFURT: Deutsche Bank took a decisive step toward ending a dispute with the heirs of late media mogul Leo Kirch yesterday after the top committee on the bank’s supervisory board discussed an out of court settlement, a person familiar with the matter said.
The proposed settlement, which has been mostly concluded with Kirch representatives, would cost Deutsche Bank around ¤900m ($1.24bn).
“A settlement is largely negotiated,” said the source.
Any final settlement with Kirch would be a major breakthrough for Germany’s biggest bank, whose management team led by co-Chief Executives Anshu Jain and Juergen Fitschen is trying to shorten a long list of investigations and legal cases.
The Kirch case has dogged Deutsche Bank for more than a decade.
Deutsche Bank and a spokesman for the Kirch family declined to comment.
The supervisory board has discussed proposals to settle the suit on several occasions in the recent past. None of those led to an agreed deal.
In the two-tier board structure common to big, listed German companies, the supervisory board oversees management and some major decisions undertaken by management.
Kirch, who died in 2011, had claimed that ex-Deutsche chief executive and later Chairman Rolf Breuer triggered his media group’s downfall by questioning its creditworthiness in a 2002 television interview.
Kirch sought for years to recoup about ¤2bn ($2.7bn) in damages. Deutsche Bank and its officers have denied that Breuer’s comments led to the collapse of the Kirch empire.
The Kirch lawsuit, one of Germany’s most bitter corporate disputes, led prosecutors to search Deutsche Bank offices in 2012 as the court case progressed.
In 2012, a Munich judge said Kirch had suffered damages of between ¤120m and ¤1.5bn.
A settlement would reduce uncertainty about the costs of fines and scandals that have plagued Deutsche and other banks since the financial crisis. Management recently said the bank may need to top up its legal reserves to cover the cost of new settlements.
The threat of more costly penalties has overshadowed Deutsche Bank’s share price. The bank currently has a price/book ratio of 0.6 compared to an average of 0.9 for major peers, according to Thomson Reuters data.
Deutsche Bank paid out roughly ¤5bn in settlements, fines and claims for 2012 and 2013 and has set aside a pot worth more than ¤2bn to deal with future problems.
Some of those provisions include money for any Kirch settlement, but the bank has never stipulated precisely how much, leaving a question mark over how much any deal would affect 2014 results.
Co-CEO Fitschen was targeted by Munich prosecutors last November who said they were investigating whether he gave misleading evidence in the suit.
Der Spiegel magazine and newspaper Sueddeutsche Zeitung have said a settlement could help Fitschen if it puts an end to the criminal investigation where he is named as a suspect.
Fitschen said in late January that the bank, which has already built provisions to cover an indemnity, is aiming to resolve major pending legal disputes this year.Reuters
