The news out of Deutsche Bank dragged European stocks broadly lower, with Germany’s DAX down 1.5%, France’s CAC-40 index down 1.1% and the U.K.’s FTSE 100 index down 0.3%. On the continent, bank stocks also tumbled, with Italy’s troubled Monte dei Paschi shares being suspended after crashing more than 7%.
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“The negotiations are only just beginning”.
The department declined to comment.
The Wall Street Journal earlier reported the department’s demands.
Deutsche Bank’s attempt to negotiate a lower settlement will likely trigger several months of talks, which could further erode its share price.
He said: “RBS could have to pay up to 13 billion USA dollars (£9.8 billion) to settle the claims”. Record low interest rates have narrowed the difference between the bank’s borrowing costs and what they earn in interest on loans, eroding profits.
During a conference call in the second quarter of this year in July, Deutsche Bank chief financial officer Marcus Schenck emphasized that his company is committed to “resolve four of its most important highest risk matters including…enforcement matters the DoJ investigations regarding the bank’s pre-financial crisis RMBS business”.
(Open): The market opened lower, with bank shares hit after Deutsche Bank said it faced a $14bn penalty to settle a probe by USA regulators into the selling of mortgage-backed securities.
The DoJ wants $14 billion (12.48 billion euros) to settle claims that Germany’s biggest bank mis-sold mortgage-backed securities. In 2014, Bank of America Corp. Goldman Sachs also ended up with a $5.06 billion fine to settle claims for their part in the financial crisis. Deutsche Bank hasn’t said what it has set aside in anticipation of a settlement.
She was asked whether German officials had the impression that the settlement demand was some sort of retaliation to the European Commission’s ruling that Ireland gave 13 billion euros in illegal tax breaks to USA firm Apple.
One of Donald Trump’s closest allies on Wall Street is a now-struggling German bank. Like many of its peers, it has since faced a slew of lawsuits that often trace back to the boom years before the crash. The bank held EUR5.5 billion in total litigation reserves as of June 30.
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Deutsche Bank’s shares now stand at around 10 per cent of their pre-crisis value, after losing some 45 per cent of their value since the beginning of 2016 – making them the worst performer on the DAX index of leading German shares.
