USA seeks $14 bn from Deutsche Bank over mortgage bonds

These claims that the Department of Justice (DoJ) may consider in connection with the bank’s issuance and underwriting of residential mortgage-backed securities (RMBS) and related securitization activities happened between 2005 and 2007, according to Deutsche Bank on Friday.

It was only last week that news came out that Deutsche Bank AG was nearing a settlement deal with US authorities, causing the bank’s shares to jump the most in two month, an article in Bloomberg by Jan-Henrik Foerster reported.

The Wall Street Journal first reported the figure, citing sources familiar with the situation. Visit MarketWatch.com for more information on this news.

U.S. authorities have accused major banks of misleading investors about the values and quality of complex mortgage-backed securities sold before the 2008 financial crisis.

According to the statement, Deutsche Bank will not settle the potential claims for “anywhere near the number cited”, and that the Justice Department has asked the Bank to make a counter-proposal.

“The negotiations are only just beginning”, the statement said. The total tab for Bank of America Corp., which reached a similar settlement in 2014, was almost $17 billion.

In April of a year ago, Deutsche Bank also paid a record $2.5 billion to settle American and British charges that it had manipulated the London Interbank Offered Rate, or Libor, affecting commercial interest rates.

Earlier Thursday, JPMorgan Chase & Co. analysts wrote in a note to clients that a settlement of about $2.4 billion “would be taken very positively”, but that an agreement exceeding $4 billion would pose questions about the bank’s capital positions and force it to “build additional litigation reserves”.

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