Deutsche Bank Reaches Billion Dollar Settlement over Kirch Bankruptcy
The German bank will pay out more than $1 billion in compensation to the heirs of late German media mogul Leo Kirch.
After more than a decade of legal battles, Deutsche Bank on Thursday announced it had reached a settlement with the heirs of late media mogul Leo Kirch that will see the bank pay out more than $1 billion in damages.
The bank said it will pay a lump sum of $1.06 billion (€775 million) plus interest and a reimbursement of legal costs to Kirch's heirs, ending the biggest suit in the German media industry. The decision is a final victory for Kirch, who died in 2011. The total payment will amount to around $1.26 billion (€925 million).
The suit was linked to the collapse of Kirch's KirchMedia group, which went bust in 2002, marking the largest ever bankruptcy in post-war Germany.
Kirch blamed the collapse on then Deutsche Bank CEO Rolf Breuer, who publicly questioned KirchMedia's credit worthiness in a 2002 interview on Bloomberg TV. At the time, Deutsche Bank was one of KirchMedia's main creditors.
Kirch's family was initially seeking a total of more than $4.5 billion (€3.3 billion) in damages against Deutsche Bank.
The settlement, after existing provisions, will decrease fourth-quarter profits by about $479 million (€350 million) the bank said in an emailed statement today.
"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, said in the statement. "In our judgment, this is in the best interests of our stakeholders."
The agreement is a late victory for Kirch, who died in 2011. The mogul is largely credited with building up the international television rights business, and at the time of its collapse, KirchMedia was the world's largest TV rights group.