Bloomberg News

Deutsche Bank May Have to Pay $1.9 Billion in Kirch Suit

November 16, 2012

Deutsche Bank May Have to Pay $1.9 Billion in Kirch Suit

A Munich court judge said in a preliminary assessment of the case that it is likely that Deutsche Bank and former Chief Executive Officer Rolf Breuer will be found liable in the lawsuit. Photographer: Guido Krzikowski/Bloomberg

Deutsche Bank AG (DBK) may have to pay as much as 1.5 billion euros ($1.9 billion) in a case tied to the collapse of the Kirch group of media companies, a Munich court said today.

Judge Guido Kotschy said in a preliminary assessment of the case that it is likely that Deutsche Bank and former Chief Executive Officer Rolf Breuer will be found liable in the lawsuit. The damages will range from 120 million euros to 1.5 billion euros, he said.

The case is one of several lawsuits continuing after Leo Kirch’s July 2011 death that allege the bank secretly plotted to bring about the demise of his media empire. Part of the conspiracy, they argue, was a 2002 interview on Bloomberg Television in which Breuer said “everything that you can read and hear” is that “the financial sector isn’t prepared to provide further” loans or equity to Kirch.

“We don’t believe that the comments in the interview were a mere accident, as you told us here at the beginning of this case,” Kotschy said in court, addressing Breuer. “It just doesn’t fit the facts.”

Deutsche Bank and Breuer have denied the allegations.

“The insinuations are violating my personal honor,” Breuer said today in closing arguments.

Deutsche Bank spokesman Christian Streckert declined to comment on Kotschy’s assessment beyond the bank’s statements in court. The court scheduled another hearing for Dec. 14.

Rejected Settlements

Deutsche Bank rejected a possible settlement with the Kirch side in March. The lender and Kirch’s heirs discussed a possible 800 million-euro settlement, a person with knowledge of the negotiations said at the time. The Frankfurt-based bank last year was said to have rejected a 775 million-euro settlement proposed by the Munich court.

“The judge looks to have given a range with a sum that is unacceptable to the Kirch side and includes a horror scenario for Deutsche Bank, which is likely to help get them to settle,” said Christian Muschick, an analyst with Silvia Quandt Research in Frankfurt who has the equivalent of a hold recommendation on Deutsche Bank shares. “The figure Deutsche Bank was said to reject as a settlement earlier is pretty much in the middle of the range, maybe that’s where we’ll end up after all.”

Kotschy told the parties in October that the court was of the preliminary opinion the Kirch side successfully showed Breuer and Deutsche Bank intentionally wronged Kirch by obstructing the restructuring of the group.

Kirch Death

Kirch, who died last year at the age of 84, pursued claims against Breuer and Deutsche Bank seeking at least 3.3 billion euros.

The litigation spawned a separate criminal probe by Munich prosecutors over testimony Breuer gave last year in another Kirch case. Former Deutsche Bank CEO Josef Ackermann, former Chairman Clemens Boersig and former board member Tessen von Heydebreck are also under investigation over their testimony.

Deutsche Bank has denied wrongdoing by any of its executives.

Today’s case is: OLG Muenchen, 5 U 2472/09.

To contact the reporter on this story: Karin Matussek in Berlin at kmatussek@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net


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