After a ten-year court battle, Deutsche Bank AG (NYSE:DB) (ETR:DBK) finally decided to settle with the heirs of German media mogul Leo Kirch. The bank announced today it has agreed to pay 925 million euros ($1.27 billion) to settle the case. The case stems from charges of defamation related to statements made by former DB CEO Rolf Breuer in 2002 regarding the creditworthiness of Kirch.
Background of the case
Rolf Breuer, the CEO of Deutsche Bank AG (NYSE:DB) (ETR:DBK) in 2002, spoke frankly regarding his opinion on the creditworthiness of Kirch at the time in an interview on Bloomberg TV. However, given his position as the CEO as one of the world’s largest banks, his inopportune statement shocked the financial markets and sent Kirch’s media empire into a tailspin. Kirch’s media group was forced to file for bankruptcy less than six months later. More than 20 lawsuits relating to the situation ending up being filed, including a $3.3 billion claim against DB from Kirch’s heirs after he died in 2011.
The Munich Higher Regional Court ruled in favor of the plaintiffs in December 2012, saying that Breuer and his employer were liable for statements made in the interview. Damages were to be determined at a later date. Deutsche Bank had filed an appeal with Germany’s top civil court.
The lawsuits alleged Deutsche Bank had planned the downfall of Kirch’s media empire or were threatening to do so to force him to accept DB as a restructuring adviser. The plaintiffs argue the Bloomberg TV interview was just the coup de grace in the plot.
Deutsche bank statement
“With today’s agreement, we are resolving a well-known and long-standing legacy matter,” Juergen Fitschen and Anshu Jain, Co-Chief Executive Officers of Deutsche Bank, wrote in the statement. “In our judgment, this is in the best interests of our stakeholders.”
Deutsche Bank AG (NYSE:DB) (ETR:DBK) was down over 1.5% to around 35 euros in late trading in Frankfurt. DB shares have declined 3.5% the last year.