Deutsche Bank races against time to reach US set­tle­ment

The Sun (Malaysia) - - SUNBIZ -

FRANK­FURT: Deutsche Bank is throw­ing its en­er­gies into reach­ing a set­tle­ment be­fore next month’s pres­i­den­tial elec­tion wit US au­thor­i­ties de­mand­ing a fine of up to US$14 bil­lion (RM57.9 bil­lion) for mis­selling mort­gage-backed se­cu­ri­ties.

The threat of such a large fine has pushed Deutsche shares to record lows, and a cut-price set­tle­ment is ur­gently needed to re­verse the trend and help to re­store con­fi­dence in Ger­many’s largest lender.

Its shares were not traded in Ger­many yes­ter­day be­cause of a pub­lic hol­i­day, but they would re­sume trad­ing in the US.

A me­dia re­port late on Fri­day that Deutsche and the US De­part­ment of Jus­tice (DoJ) were close to agree­ing on a set­tle­ment of US$5.4 bil­lion lifted the stock 6% higher, but that re­port has not been con­firmed.

The Wall Street Jour­nal re­ported on Sun­day that the bank’s talks with the DoJ were con­tin­u­ing. De­tails are in flux, with no deal yet pre­sented to se­nior de­ci­sion mak­ers for ap­proval on ei­ther side, the pa­per said, cit­ing peo­ple fa­mil­iar with the mat­ter.

“Clearly, so long as a fine of this or­der of mag­ni­tude (US$14 bil­lion) is an even re­mote pos­si­bil­ity, mar­kets worry,” Uni­Credit chief econ­o­mist Erik F. Nielsen wrote in a note.

On Sun­day, Ger­man Econ­omy Min­is­ter Sig­mar Gabriel lashed out at Deutsche Bank’s han­dling of its trou­bles, say­ing “ir­re­spon­si­ble” man­agers had put thou­sands of jobs at risk.

“I don’t know whether to laugh or cry that the bank, which turned spec­u­la­tion into a busi­ness model, is now call­ing it­self a vic­tim of it,” he told re­porters, after CEO John Cryan this week blamed spec­u­la­tors for push­ing the em­bat­tled lender’s share price to a record low. – Reuters, AFP

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