Germany’s financial giant Deutsche Bank has ended a decade-long legal battle with the heirs of late media mogul Leo Kirch. The settlement will dent the bank’s profit, but help shorten a long list of similar litigation.
Deutsche Bank agreed to pay 775 million euros ($1.1 billion) plus interest and legal fees to resolve a long-standing legacy matter with the heirs of Leo Kirch, Germany's biggest lender announced Thursday.
The settlement, which is estimated to amount to a total cost of between 900 million and 925 million euros, was in the best interests of Deutsche Bank's stakeholders, co-Chief Executives Jürgen Fitschen and Anshu Jain said in a statement.
Originally, German media mogul Leo Kirch sought about 3.3 billion euros in damages from the Frankfurt-based lender, claiming former Deutsche Bank CEO Rolf Breuer had questioned his creditworthiness in a public interview in 2002, leading to his media group's insolvency a month later. The lawsuits, which continued after Kirch's death in July 2011, alleged the bank secretly plotted to bring down the Kirch empire, replacing him with a bank-appointed restructuring advisor.
Following Thursday's settlement, the Kirch family said it welcomed the settlement offer by Deutsche Bank.
“We wish it was reached while Mr. Kirch was still alive,” a spokesman for the family said, adding that the damage caused was much higher.
In 2012, Deutsche Bank's board still rejected a settlement. But current co-CEOs Jain and Fitschen apparently seek to clear the decks of legacy issues as they reshape the bank. On Thursday, Deutsche Bank said the settlement would be reflected in its 2013 fourth quarter results, pushing it about 350 million euros deeper into the red after tax and bringing its net loss to about 1.3 billion euros.
The settlement shortens Deutsche Bank's long list of recent scandals which include manipulations of the Libor benchmark interest rate and dubious sales of sub-prime mortgages in the United States. In 2013 alone, the bank had set aside 2.3 billion euros to cover fines and settlement costs.
uhe/dr (dpa, Reuters, AP)