Mercoledì, 13 Dicembre, 2017

Stocks Hit as Deutsche Bank Fine Triggers Bank Rout

Remigio Civitarese | 23 Settembre, 2016, 09:48

At the end of June, RBS - which is more than 70 percent owned by the United Kingdom taxpayer - had $6.61 billion reserved against costs for litigation and fines, a sum which the bank said did not include penalties imposed by the DoJ.

Banks' alleged misconducts related to the MBS dates back to the financial crisis of 2008-09, when the German lender allegedly misled investors through inadequate underwriting and issuance of MBS over the 2005-2007 period. The DOJ made no public comment on these negotiations.

Deutsche Bank released a statement saying: "The negotiations are only just beginning".

"Our concern is that this could be just a start, and other European banks could face a similar fate, and this why investors are leaving the boat with respect to the banking sector", said Aslam. It only has 5.5 billion set aside.

A $14 billion fine, or even half that sum, would still rank among one of the largest paid by banks to USA authorities in recent years.

The concern comes after The Wall Street Journal reported late Thursday that the Justice Department proposed the bank pay $14 billion to settle several high-profile mortgage probes in the US dating back to securities the bank sold between 2005 and 2007.

Much of the underlying lending was worthless or fraudulent, delivering billions of dollars in losses to bond holders when the housing market collapsed, bringing down numerous banks and touching off the worst U.S. recession since the 1930s. Earlier this year, Goldman Sachs agreed to pay $5.1 billion to put to rest claims over its dealings.

The U.S. -listed shares of Deutsche Bank, the German financial conglomerate, plunged $1.36, or 9 percent, to $13.39 after the bank said it did not intend to pay the $14 billion settlement that the Department of Justice had proposed.

In 2014, the DoJ asked Citigroup to pay $12 billion to resolve an investigation into the sale of shoddy mortgage-backed securities, sources said.

Deutsche Bank is in the midst of a painful restructuring as it is coping with a tougher regulatory environment, cost cutting and settling multiple legal cases. The bank's total market value is only €16.7 billion.

The Wall Street Journal, citing "people familiar with the matter", reported that the $14 billion fee would settle a series of high-profile mortgage-securities probes during the financial crisis. Plath expects a final settlement of about $4 billion to $5 billion. The bank has already settled other claims such as $1.9 billion for defrauding Fannie May and Freddie Mac. DB stock is down nearly 40% year-to-date (YTD).

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