Deutsche’s new CEO John Cryan has led a cost-cutting and restructuring drive that’s involved job cuts and the bank’s withdrawal from some smaller countries.
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Deutsche Bank made a scant 20-million euro profit in the second quarter despite 7.4 billion euros ($8.3 billion) in net revenue. But the final amount will probably be significantly less, because the US often begins negotiations with a tough posture and high price.
US and European stocks were moderately lower in early trading Friday after Deutsche Bank said it wouldn’t settle with the Department of Justice over its role in the 2008 financial crisis.
OIL PRICES: Benchmark U.S. crude lost 36 cents to $43.56 per barrel in electronic trading on the New York Mercantile Exchange.
That amount is close to the company’s EUR16.5 billion ($18.44 billion) market cap.
The Department of Justice didn’t immediately respond to a request for comment outside of office hours.
The German-based bank is among many financial institutions investigated over dealings in discreditable mortgages in the run-up to the financial crisis.
In 2014, United States bank Citigroup settled a probe into mortgage-backed securities for $7bn (£5bn) while in a similar case this year, Goldman Sachs agreed to pay $5bn (£4bn).
Other Wall Street firms that have struck similar deals include JPMorgan Chase and Citigroup. Some analysts believe the Bank of Japan may increase asset purchases up to 100 trillion yen a year from the current 80 trillion yen a year, or take its negative policy rate to minus 0.3 per cent from minus 0.1 per cent.
However, Bank of America agreed to pay $16.65 billion in settlement charge in 2014, which is higher than the latest settlement payment asked by the DoJ for Deutsche Bank.
European banking shares have plummeted after the US Department of Justice (DoJ) slapped Deutsche Bank with a hefty settlement proposal.
But in a quick reaction, Deutsche Bank rejected the $14 billion figure, which the bank said was an opening proposal in settlement talks with USA prosecutors. The bank ended up paying $7 billion. In 2014, Bank of America settled their probe with almost $17 billion.
He added that the bank was not concerned and there was “no reason to be anxious right now”.
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The $14bn fine exceeds the $13bn JP Morgan paid in 2013 to settle allegations that it misled investors about the quality of mortgages it was selling in before the 2008-09 crisis. Its litigation bill since 2012 has already hit more than 12 billion euros.
