Following a ruling by the German Supreme Court to prohibit increases in bank charges without the explicit agreement of customers, Deutsche Bank estimates its losses at 300 million euros, and is preparing to meet the claims.
A ruling that worries the German banking sector
The April 28 ruling by the German Supreme Court, which prohibits banks from modifying their general terms and conditions and increasing bank charges without the explicit agreement of their customers, is causing concern throughout the German banking sector.
At present, only Deutsche Bank has quantified the amount it might have to repay if all affected customers were to file a claim. The potential loss amounts to 300 million euros.
Of these 300 million euros, 100 million euros are earmarked for the second quarter of 2021, a sum that Deutsche Bank has already set aside, and 200 million euros for the third and fourth quarters, as CFO James von Moltke explained at the European Financials Conference organized by US bank Goldman Sachs.
However, James von Moltke has said that he regards the loss as temporary, and plans to raise bank charges again in the fourth quarter, even if this means losing customers.
Although the other German banks have yet to quantify the consequences of the Supreme Court ruling, they are nonetheless worried and could see their annual profits halved, as predicted by the BaFin, the federal financial supervisory authority, in May.
Commerzbank, Germany's No. 2 bank, has already sought the explicit consent of its customers to introduce new charges from July 1. Commerzbank subsidiary Comdirect, meanwhile, has put on hold the fee increases it had planned for May.
Numerous charges for Deutsche Bank
While Deutsche Bank was particularly optimistic when presenting its financial results at the end of April, with a quarterly profit of 908 million euros, the loss resulting from the German Supreme Court ruling comes on top of other charges and somewhat tarnishes the promises for the coming months.
As a result, the German bank had to make a larger-than-expected contribution to the Single Resolution Fund (SRF ), a rescue fund for banks in difficulty. As part of the Single Resolution Board (SRB), the SRF and the amount of contributions made each year are regularly the subject of fierce criticism from banks. Deutsche Bank's contribution this year amounts to 200 million euros.
Finally, the German bank faces a third charge: it has to pay 70 million euros to the guarantee fund of the Federation of German Private Banks (BdB) following the collapse of Greensill Bank.