The pummeling was set off by news late Thursday the U.S. Department of Justice asked Deutsche Bank to pay $14 billion to settle civil claims (http://www.marketwatch.com/story/deutsche-bank-rebuffs-14-billion-settlement-demand-in-us-mortgage-probe-2016-09-16) related to mortgage-backed securities.
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Deutsche Bank has no intention of paying a $14 billion settlement fine issued by United States authorities over claims it missold mortgage-backed securities, the bank said in a statement amid growing concerns over its future.
At the end of June, RBS – which is more than 70 percent owned by the United Kingdom taxpayer – had $6.61 billion reserved against costs for litigation and fines, a sum which the bank said did not include penalties imposed by the DoJ.
Deutsche Bank released a statement saying: “The negotiations are only just beginning”.
On news of the filing today, Deutsche was quick to respond that it had no intention to settle these potential claims anywhere near that figure.
Deutsche Bank has been asked to pay $14bn (£11bn) to settle a U.S. probe into mortgage-linked financial products, the lender has said.
This issue is expected to be negotiated over several months and is making the Deutsche Bank investors nervous.
The resultant losses suffered by investors, along with foreclosures across the United States, formed one of the triggers for the financial crisis.
“RBS needs to defend its interests vigorously and not let DoJ dictate the terms to them”, he said.
Deutsche Bank later confirmed that the $14 billion figure was an opening bid and that the bank had been invited to submit a counterproposal.
The bank’s shares suffered sharp losses in trading in Frankfurt on Friday, dropping almost 7.3 per cent by around 1045 GMT to stand at 12.15 euros.
Last year, U.S. market regulators fined the German lender $55 million, concluding that it had overvalued its holdings of credit derivatives by at least $15 billion during the financial crisis. They added that Deutsche Bank is resistant to the proposed amount.
That amount is close to the company’s EUR16.5 billion ($18.44 billion) market cap.
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Around mid-day in NY, the Dow Jones Industrial Average was down 0.45 percent, the broad-based S&P 500 fell 0.5 percent and the tech-rich Nasdaq Composite Index slipped 0.3 percent. (GS) had agreed to pay more $5.1 billion to settle similar allegations, while Morgan Stanley (MS) agreed to pay about $3.2 billion.
