He added that the bank was not concerned and there was “no reason to be anxious right now”.
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The amount proposed by the US Justice Department comes on top of the €12 billion ($13.5 billion) Deutsche Bank has already shelled out in legal fines since 2011.
It added: “The company has received approaches from a number of credible parties, which the board believes may lead to an offer competing with HarbourVest and could deliver superior value”. “There’s going to be an very bad lot of management time spent on it to get to a sensible number”.
In June, the International Monetary Fund (IMF) said that of the banks big enough to bring the financial system crashing down, Deutsche Bank was the riskiest. Royal Bank of Scotland Group Plc slumped 4.5%, while Barclays Plc fell 2.8%.
The yield on the 10-year Treasury note was mostly unchanged at 1.69.
The bank’s shares fell almost 7% in early trading.
The amount requested by the DOJ is “multiples above expectations”, and is being considered as a starting point for discussion between the two sides, said Jefferies equity analyst Joseph Dickerson.
Some observers are also concerned that Deutsche Bank may need to raise funds, potentially through a capital increase, to finance the settlement.
The far bigger-than-expected penalty was levied by the U.S. Department of Justice to settle claims that the German bank missold mortgage-backed securities. The Wall Street Journal reported the $14 billion claim on Thursday.
On the floor of the Frankfurt stock exchange, analyst Robert Halver with Baader Bank said: “Deutsche Bank can’t pay $14 billion”. Goldman Sachs made a settlement for $5.1 billion at the start of the current year. The settlement included an admission of wrongdoing.
Those talks are attempting to settle civil claims that involves Deutsche Bank’s activities in residential mortgage-backed securities (RMBS) between 2005 and 2007. The sides may negotiate over the final tab, as well as what conduct the bank will acknowledge and whether individuals will be sanctioned. The company will likely look to bring the fine down into the single digits as part of its negotiations with the DOJ.
Nevertheless, investors appear to be banking on the fact that whatever settlement the bank pays will be large as evidence by not only Deutsche Bank’s stock decline but many of its European peers.
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In July, one of Deutsche Bank’s United States operations failed a stress test by the Federal Reserve, which it criticised for having “broad and substantial weaknesses” in capital planning and for making insufficient progress on previous year.
