Deutsche Bank AG will review its shareholder payout plans as progress in settling one of its biggest legal issues is expected to lift profit in the third quarter.

The German lender expects a €430 million boost to pre-tax profit in the third quarter, after reaching agreements with more than 80 plaintiffs in a long-running dispute over its acquisition of retail lender Postbank, according to a statement late on Wednesday. 

“Against the backdrop of this improvement to our capital plan, we will review our distribution plans,” a spokesman for Deutsche Bank said in a statement to Bloomberg.

The shares rose as much as 3.1% as the settlements raise the prospect that Deutsche Bank could yet resume plans for more buy-backs this year. The firm was forced to renege on that pledge last quarter, when it set aside €1.3 billion for the Postbank matter. The surprise move pushed it to its first quarterly loss in four years. 

The release of a large chunk of those provisions means there’s “upside potential” for buy-backs later this year or early 2025, Bloomberg Intelligence analyst Alison Williams said in a note on Thursday. The settlement amount is a “more favourable outcome than previously expected”, she said.

Deutsche Bank has reached agreements with plaintiffs representing almost 60% of total claims relating to litigation over its Postbank takeover more than a decade ago. The average settlement amount would consume about 45% of the total provisions that Deutsche Bank had booked for the cases, it said.

Analysts were predicting pre-tax income of around €1.8 billion for the third quarter before the announcement, according to data compiled by Bloomberg.

The Postbank litigation has been hanging over Deutsche Bank since 2010, when it took full control of the German retail lender. The claimants - former investors of Postbank - were seeking a higher price than the €25 per share that they received.  

A lawyer for a another group of plaintiffs whose case is being handled by a court in Cologne last week dismissed a settlement offer from Deutsche Bank as “dead on arrival”. The Cologne court on Monday postponed a ruling in the matter to October.

  - Bloomberg