Deutsche Bank nearing
settlement with U.S. authorities on mortgages: sources
Send a link to a friend
[September 09, 2016]
By Arno Schuetze and Andreas Kröner
FRANKFURT (Reuters) - Deutsche Bank
is nearing a settlement with U.S. authorities on past misspelling of
mortgage-backed securities, two people close to the matter said.
The case is of many over the past decade which have tarnished the
reputation of the banking sector and cost banks billions in fines.
While the price for the Deutsche settlement has not yet been
decided, the payment "will not overburden" the bank, one of the
German monthly manager magazine earlier reported that Deutsche Bank
is expected to receive a demand for more than $2.4 billion from U.S.
authorities in settlement of an investigation into past misspelling
of mortgage-backed securities.
The U.S. Department of Justice (DoJ) is expected to send Deutsche
Bank a statement of facts stretching to about 100 pages early next
week, specifying how much Deutsche will be asked to pay to settle
the case, the magazine said.
Deutsche Bank declined to comment.
Its shares had risen 5.2 percent by 1121 GMT in a flat German
market, with traders citing relief that Deutsche Bank could be close
to concluding the long-running investigation.
"A $2.4 billion U.S. mortgages settlement would be clearly below the
3 billion euros ($3.4 billion) that I expected, so this is clearly
positive news," said Enrico Racioppi from brokerage Hammer Partners.
Deutsche Bank's shares are still down 37 percent since the start of
year, reflecting investor doubts about its ability to turn itself
Deutsche was once one of Europe's most successful players on Wall
Street. Like many of its peers, it has since has faced a slew of
lawsuits that often trace back to the boom years before the crash.
Its litigation bill since 2012 has already hit more than 12 billion
Claims filed by individuals, companies and regulators against
Deutsche, outlined in the bank's 2015 annual report, relate to
misspelling of subprime loans and manipulation of foreign exchange
rates or gold and silver prices. Other law suits are for the rigging
of borrowing benchmarks Libor and Euribor, used to set the price of
mortgages and derivatives.
In July Chief Executive John Cryan said he hoped to close the four
largest remaining litigation cases this year.
[to top of second column]
A logo of a branch of Germany's Deutsche Bank is seen in Cologne,
Germany, July 18, 2016. REUTERS/Wolfgang Rattay/File Photo
These are the mortgages and FX cases, an investigation into suspicious equities
trades in Russia and allegations of money laundering.
Rival Goldman Sachs agreed in April to pay $5.06 billion to settle claims that
it misled mortgage bond investors during the financial crisis.
That settlement included a $2.39 billion civil penalty, $1.8 billion in other
relief, including funds for homeowners whose mortgages exceed the value of their
property, and an $875 million payment to resolve claims by cooperative and home
loan banks among others.
Deutsche Bank's settlement will comprise a different list of recipients, a
source close to the matter said, adding that the lender had already settled some
claims three years ago.
In late 2013 Deutsche Bank agreed to pay $1.9 billion to settle claims that it
defrauded U.S. government-controlled Fannie Mae and Freddie Mac, America's
biggest providers of housing finance, into buying $14.2 billion in
mortgage-backed securities before the 2008 financial crisis.
Manager magazine said the DoJ's demands are for Deutsche to pay more than the
$2.39 billion that Goldman paid for violations of the Financial Institutions
Reform, Recovery and Enforcement Act, but the final sum is still subject to
(Additional reporting by Hakan Ersen; Editing by David Goodman/Ruth Pitchford)
[© 2016 Thomson Reuters. All rights
Copyright 2016 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.