Deutsche Bank Says Nein to Settlement Demand

Deutsche Bank is among the several lenders accused by US authorities of misleading investors about the value and quality or RMBS sold before the 2008 financial crisis.

Eigendorf said that it was a very high number but was confident that “we’ll be able to negotiate this number down”. “There’s going to be an bad lot of management time spent on it to get to a sensible number”.

The energy index was a close second, declining 0.94 percent as oil prices fell 2.2 percent on worries of oversupply.

Other European lenders probed in relation to residential mortgage-backed securities have also shed two or three per cent, in a new bout of jitteriness about the banking sector.

Record low interest rates have narrowed the difference between the bank’s borrowing costs and what they earn in interest on loans, eroding profits.

The financial crisis is still haunting Deutsche Bank.

“It certainly is another thing that could help them increase their trend toward normalization”, said Mary Ann Hurley, vice president in fixed income trading at DA Davidson in Seattle. “The fine, even if reduced, could surpass all provisions held by the bank”.

The German finance ministry said on Friday that the government expected a “fair result” from the negotiations but that the talks were a matter for the bank and the American authorities. The Wall Street Journal reported the $14 billion claim on Thursday.

Analysts expect the bank to fork over anywhere between $4-$7 billion once the final settlement is reached. (GS) had agreed to pay more $5.1 billion to settle similar allegations, while Morgan Stanley (MS) agreed to pay about $3.2 billion. The settlement included an admission of wrongdoing.

He said: “RBS could have to pay up to 13 billion United States dollars (£9.8 billion) to settle the claims”. It described the DOJ’s proposal as the start of “negotiations”.

Deutsche Bank’s shares stumbled 8.5%, wiping off roughly €1.5 billion from the German lenders’ market capitalization.

Cryan has said that he aims to settle major outstanding legal issues as soon as possible as part of his wider overhaul. That will force the bank to go for more litigation reserves which it already has more than numerous banks on the Street.

The high initial demand by US authorities also shows that Deutsche Bank has a long way to go to sort out the some 7,800 legal disputes it is involved in, says Fairesearch’s Mr. Hein. But I’m sure in the end it won’t be that high.