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Trouble in Frankfurt: Deutsche Bank’s shares tumble again

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Trouble in Frankfurt

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When main trading ended in Frankfurt on Thursday, Deutsche Bank’s shares were 1% up on the day—cause for quiet relief in another jittery week. At close of play in New York four and a half hours later, they were 6.7% down. The catalyst: a Bloomberg report saying that “about ten” hedge funds that use Deutsche’s prime brokerage had moved part of their derivatives holdings elsewhere, to reduce their exposure to Germany’s biggest lender.
Bloomberg noted that “the vast majority” of clients had not budged. Deutsche responded that it was “confident that the vast majority of them have a full understanding of our stable financial position”. But the news dealt another blow to Deutsche’s already battered shares, which have been plumbing 33-year lows. Deutsche has been reeling for a fortnight, since receiving a request for $14 billion from America’s Department of Justice (DoJ) to settle claims that it mis-sold residential-mortgage-backed securities between 2005 and 2007.
A $14 billion legal bill would blow a sizeable hole in …

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Deutsche Bank: Won’t pay! Can’t pay?

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BILLS for pre-crisis buccaneering are still coming in. Deutsche Bank, Germany’s biggest lender, confirmed on September 15th that America’s Department of Justice (DoJ) had asked for $14 billion to settle possible claims connected with the underwriting and sale of residential mortgage-backed securities (RMBSs) between 2005 and 2007. The next day Deutsche’s share price, already reeling after a wretched year, plunged by 8%. It was groggier still after the weekend, closing on September 20th at a 30-year low (see chart).

American banks have settled with the DoJ for amounts between $3.2 billion (Morgan Stanley) and $16.7 billion (Bank of America), as well as agreeing on smaller sums with the Federal Housing Finance Agency (FHFA), another regulator. Deutsche, which settled with the FHFA for $1.9 billion in 2013, insists that it will not pay anything near to what the DoJ has asked for, and it surely won’t. Citigroup, which reached an …

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Can’t pay, won’t pay: America’s Department of Justice asks Deutsche Bank for $14 billion

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“DEUTSCHE BANK has no intent to settle these potential civil claims anywhere near the number cited.” Shock may explain the rickety syntax. On September 16th Germany’s largest bank confirmed reports that America’s Department of Justice had asked for $14 billion to settle possible claims connected with the underwriting and sale of residential-mortgage-backed securities (RMBSs) between 2005 and 2007. Deutsche’s share price, already hovering close to record lows after a wretched year, plunged by more than 8%. So did those of other European banks yet to agree terms with the DoJ over RMBSs. Royal Bank of Scotland’s shares dropped by 4.4% and Credit Suisse’s by 4%; Barclays and UBS shed 2%-plus.
American banks have settled with the department for amounts between $3.2 billion (Morgan Stanley) and $16.7 billion (Bank of America), as well as paying smaller sums to the Federal Housing Finance Agency (FHFA), another regulator. Analysts had expected Deutsche’s penalty to be at the bottom of that range, or even below it. Deutsche, …

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