Deutsche Bank races against time to reach US settlement
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