Other European banks fell as well.
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The index edged up 8.47 points to 6,681.78 with investors also awaiting the outcome of the Bank of England’s monthly monetary policy meeting at midday.
Financials led the way lower after The Wall Street Journal late Thursday said the USA had asked Deutsche Bank AG (DBK.XE) (DBK.XE) 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.
Today, the banking sector in general was hit hard, after Deutsche Bank was told it faces a $14 billion United States settlement claim from the U.S. following an investigation into mortgage backed securities.
Deutsche Bank later confirmed that the $14 billion figure was an opening bid and that the bank had been invited to submit a counterproposal.
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.
“The question would be how much damage would it do to the economy if the bank were to topple”, said Green Party financial spokesman Gerhard Schick. It described the DOJ’s proposal as the start of “negotiations”. The fine eventually came in at US$7 billion.
In 2014, it asked Citigroup to pay US$12 billion to resolve an investigation into the sale of shoddy mortgage-backed securities, sources said.
In a similar case, rival Goldman Sachs agreed in April to pay $5.06 billion to settle claims that it misled mortgage bond investors during the financial crisis.
A recent European Union ruling that Apple must pay up to 13 billion euros in taxes to the Irish government and the forthcoming U.S. election could complicate Deutsche Bank’s efforts to whittle down the demand.
The German bank has already paid out US$2.5 billion in the United States over manipulation of the Libor interest rate used by banks to lend to one another, and settled a dispute with the US Federal Reserve and the DFS, which accused it of violating bans on trading with Syria and Iran.
Deutsche Bank booked an nearly 7 billion-euro loss in 2015, and its May annual general meeting saw shareholders berate managers for their performance.
Deutsche was once one of Europe’s most successful players on Wall Street. Its litigation bill since 2012 has already hit more than 12 billion euros.
Even once a deal has been reached, the bank will still have to face New York’s Department of Financial Services (DFS) regulator, which is investigating allegations of money laundering in Deutsche’s Russian arm.
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