German Regulator Imposes Oversight on Deutsche Bank for Postbank Complaints

In a significant development, Germany's leading financial regulator, BaFin, is instituting a special monitor at Deutsche Bank to supervise the bank's management of consumer service issues at its Postbank unit. This move deals a blow to the reputation of the country's top financial institution.

BaFin's head deemed the disruptions experienced in Postbank's online services, along with the challenges faced by clients in reaching customer support and enduring lengthy processing times, as "unacceptable." This issue has dealt a setback to Deutsche Bank's efforts to rebuild trust following fines for lapses in money laundering controls, as well as various penalties and government interventions.

Since 2018, BaFin has already had a monitor in place at Deutsche Bank to oversee money laundering controls. In response to this development, Deutsche Bank stated, "We are making progress in improving processing times at Postbank as part of the action plan agreed with BaFin."

Deutsche Bank's acquisition of Postbank, with its extensive client base and deep roots in Germany's postal system, began in 2008 during the global financial crisis. However, integrating it proved to be a challenge for years. Although the bank announced the completion of the final phase of integration in July, BaFin expressed its concern in an unusual rebuke in September, citing "considerable disturbances" at Postbank.

In 2019, Deutsche Bank, classified as one of the world's most significant banks, launched a nearly €9 billion ($9.5 billion) four-year turnaround plan after years of financial losses. While the initiative did lead to a restoration of profits, the bank's share price has remained lacklustre.

Deutsche Bank's CEO, Christian Sewing, admitted to missteps regarding Postbank, and highlighted that the bank had deployed hundreds of additional staff to address the issues. He emphasized, "We have not lived up to our responsibility here – and now we have to work all the harder to fix the problems quickly and completely – and regain trust."

BaFin announced that the appointed monitor will provide regular reports, with a primary focus on ensuring prompt processing of customer orders and the swift handling of pending requests. This development underscores the urgency for Deutsche Bank to rectify the challenges it faces and rebuild confidence among its clientele.

By fLEXI tEAM