The U.S. -listed shares of Deutsche Bank, the German financial conglomerate, plunged $1.30, or 9%, to $13.46 after the bank said it did not intend to pay the $14 billion settlement that the Department of Justice had proposed.
Advertisement
Deutsche Bank is one of a number of lenders to be probed over dealings involving questionable mortgages during the period, with the principal charge being that banks misled investors about the quality of their loans.
Deutsche Bank shares traded in NY plunged 8.4% to $13.50 in pre-market action Friday after the company confirmed that Justice negotiators had staked out “an opening position” of $14 billion in their discussions. Goldman Sachs also ended up with a $5.06 billion fine to settle claims for their part in the financial crisis.
Shares in the bank, which have already been battered in the past year, traded down as much as 8.6% in afternoon trading in Frankfurt. The stock hit a 52-week low of 11.07 euro following the Brexit vote.
Deutsche Bank said it “has no intention to settle these potential civil claims anywhere near the figure cited”.
The DoJ wants $14 billion (12.48 billion euros) to settle claims that Germany’s biggest bank mis-sold mortgage-backed securities.
It added that the DoJ had invited the bank to submit a counter offer, and said it expected to reach a “materially lower” figure in negotiations.
JPMorgan said earlier about the lawsuit issues of Deutsche Bank that any agreement over this issue which exceeds $4 billion will create problems for the bank regarding capital.
Recently-installed Deutsche Bank chief executive John Cryan has set an ambitious target of resolving the lender’s biggest legal worries by the end of 2016, including the U.S. mortgage-backed securities case.
It seems like it’s soon to be Deutsche Bank’s (NYSE: DB) turn on the regulatory wheel of punishment. “But because of the election campaign it may end up higher – at maybe 6 or 7 billion”.
Stock and bond market volatility has increased in the past week after a summer lull amid uncertainty about central bank support for economies.
Advertisement
“Given the very precarious finances of some European banks, of which Deutsche is one of the riskiest and systemically important, it’s disturbing and appears myopic and needlessly punitive”. Like many of its peers, it has since faced a slew of lawsuits that often trace back to the boom years before the crash. Other lawsuits are for the rigging of borrowing benchmarks Libor and Euribor, used to set the price of mortgages and derivatives. For one, it still has to account for improper trading in Russian Federation.
