FRANKFURT, Germany — A German court has ruled that Deutsche Bank didn’t sufficiently disclose the risks when selling one of its financial products to an investor.

The Federal Court of Justice said yesterday that Germany’s biggest bank must pay the company, Ille Papier-Service GmbH, some euro541,000 (US$767,000) plus interest in recompense.

The ruling could influence the outcome of other disputes between Deutsche Bank and small companies and local governments, that also entered into so-called interest-rate swap deals. The intention was to lower their interest payments, but many lost money.

In its ruling, the court agreed with Ille, which had lost twice in lower courts, that Deutsche Bank had not sufficiently disclosed the risks of the complicated transaction, dubbed a CMS spread ladder.

It also said a bank, acting as adviser, had to ask customers about the level of risk they were ready to take on, and could not assume the level of risk was appropriate simply from being acquainted with the customer beforehand.

The bank also could not rely on the customer’s professional qualifications such as a degree in economics, the court said.

Deutsche Bank said in a statement that the court “has decided regarding one specific spread ladder.”

“We will carefully review the written decision and only then can it be determined if and how much other financial businesses are affected,” it added.

The bank said that since the number of cases brought over that investment product was limited, with eight cases before the Federal Court of Justice and 17 before lower courts, the amount of money at stake was “very limited.”

Deutsche Bank shares slipped 0.6 per cent to euro40.96 in Frankfurt trading, roughly in line with the overall performance of the DAX index of blue-chip stocks.