Deutsche Bank said it expects to recognize a charge of â¬ 100 million in the second quarter after a court ruling allowed some customers to challenge higher charges.
The German lender also expects to receive an additional 100 million euros in turnover in the second and third quarters, said chief financial officer James von Moltke.
The case was brought against Deutsche Postbank’s retail business after a judge ruled that the bank had given itself too much power to change terms and conditions.
The April ruling means customers can recoup past price increases and the German regulator has warned it could see banks see half of their annual profits wiped out by compensation claims.
The move is a blow to Deutsche, which has recovered well from the pandemic, posting its highest quarterly profit since 2014. In April, the lender said it generated a net profit of 908 million euros in the first quarter, against a loss of 43 million euros during the first quarter. same period last year.
This strong performance is due in large part to its investment bank, which recorded a 32% increase in revenues, and its asset management division.
Deutsche Bank suffered a setback earlier this year after its â¬ 3.4 billion exposure to Archegos Capital, which collapsed last month after its leveraged bets fell. 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 finance conference, said that despite the setback, the bank was confident it could pass on higher costs and was prepared to lose customers from detail due to deposit fee.
In addition, he is facing difficulties following an investigation into the alleged abusive sale of foreign exchange derivatives. The sudden departure of two veteran Deutsche Bank executives, Louise Kitchen and Jonathan Tinker, was linked to the investigation, the Financial Times reported.