Deutsche Bank AG DB, +3.57% shares fell in the extended session Thursday following a report that the Justice Department was proposing the bank pay $14 billion in fines to resolve a probe into mortgage securities. Deutsche Bank shares slipped 6.8% to $13.75 after hours. The figure is preliminary, according to The Wall Street Journal, and has been discussed between the bank and government lawyers in recent days.</s>US seeks $14 bn from Deutsche Bank over mortgage bonds

Authorities in the US are seeking as much as $14 billion from Deutsche Bank to resolve allegations stemming from the sale of mortgage securities in the 2008 crisis, the German financial giant confirmed Thursday.

The payout would be the largest ever inflicted on a foreign bank in the United States, easily surpassing the $8.9 billion that the French bank BNP Paribas paid in 2014 for sanctions violations.

But in a quick reaction, Deutsche Bank rejected the $14 billion figure, which the bank said was an opening proposal in settlement talks with US prosecutors.

"Deutsche Bank has no intent to settle these potential civil claims anywhere near the number cited," the statement said.

"The negotiations are only just beginning. The bank expects that they will lead to an outcome similar to those of peer banks which have settled at materially lower amounts."

The US investment bank Goldman Sachs in April agreed to pay more than $5 billion to settle similar allegations.

US authorities have accused major banks of misleading investors about the values and quality of complex mortgage-backed securities sold before the 2008 financial crisis.

Much of the underlying lending was worthless or fraudulent, delivering billions of dollars in losses to holders of the mortgage bonds when the housing market collapsed, bringing down numerous banks and touching off the country's worst recession since the 1930s.

According to securities filings, Deutsche Bank as of June 30 had set aside $5.5 billion to resolve pending legal matters. In the mortgage-backed securities matter, the bank is aiming for an amount between $2 billion and $3 billion, according to knowledgeable sources.

The US Justice Department declined to comment.

Bank of America in 2014 paid out nearly $17 billion in a related enforcement action but federal authorities have faced stinging criticism for failing to hold individuals to account.

In recent years, Deutsche Bank has found itself mired litigation and enforcement actions around the world.

US market regulators last year fined the German lender $55 million, concluding that it had overvalued its holdings of credit derivatives by at least $15 billion during the financial crisis.

In 2015 and 2016 Deutsche Bank failed so-called stress tests conducted by the US central bank that were designed to determine whether it had adequate capital strength to weather shocks such as those of the financial crisis.

In June, the International Monetary Fund described the bank as a "major systemic risk," leaving its chief executive John Cryan to strive to convince markets that Deutsche Bank was bound to recover.

In April of last year, Deutsche Bank also paid a record $2.5 billion to settle American and British charges that it had manipulated the London Interbank Offered Rate, or Libor, affecting commercial interest rates.

The bank also settled with the US Fed and New York's Department of Financial Services of alleged sanctions violations in Syria and Iran.

In July Deutsche Bank posted a 98 percent year-on-year drop in second-quarter profits, with net earnings recorded at only $22 million, which Cryan, the bank's chief, attributed to "sustained restructuring."

Cryan plans to cut 9,000 jobs worldwide by 2020, while the bank's share price has fallen to around 10 percent of its pre-crisis value.</s>Deutsche Bank said it would fight a $14-billion demand from the U.S. Department of Justice to settle claims it missold mortgage-backed securities, a shock bill that raises questions about the future of Germany’s largest lender.

The claim against Deutsche, which is likely to trigger several months of talks, far exceeds the bank’s expectations that the DoJ would be looking for a figure of only up to €3-billion ($3.4-billion).

The demand adds to the problems facing Deutsche Bank’s Chief Executive John Cryan, a Briton who has been in the job for a year.

The bank only scraped through European stress tests in July and has warned it may need deeper cost cuts to turn itself around after revenue fell sharply in the second quarter due to challenging markets and low interest rates.

Deutsche Bank shares, which have lost around half their value this year, tumbled 7.6 per cent to 12.10 euros in Frankfurt on Friday, with analysts saying the bank may need to raise fresh funds from investors or sell assets to shore up its capital ratios.

The cost of insuring Deutsche Bank debt against default rose by around eight per cent.

The bank, which employs around 100,000 people, said it regarded the DoJ demand as an opening shot.

“Deutsche Bank has no intent to settle these potential civil claims anywhere near the number cited,” it said in a statement.

“The negotiations are only just beginning. The bank expects that they will lead to an outcome similar to those of peer banks which have settled at materially lower amounts.”

Analysts said that even a hefty reduction in the bill was likely to weigh heavily on Deutsche Bank’s finances.

“If the final bill is at €5-billion or more Deutsche Bank will not be able to avoid a capital hike anymore,” said Ingo Frommen, banking analyst at LBBW.

Deutsche Bank’s problems are likely to alarm political leaders in Europe’s largest economy and the home to the European Central Bank.

The German finance ministry said on Friday that the government expected a “fair result” from the negotiations but that the talks were a matter for the bank and the American authorities.

Finance minister Wolfgang Schaeuble took the unusual step of voicing public support for the bank earlier this year and a senior opposition figure said he expected the government to step in as a last resort if needed.

“The question would be how much damage would it do to the economy if the bank were to topple,” said Green Party financial spokesman Gerhard Schick.

The DoJ has taken a tough stance in settlement negotiations with other banks, requesting sums higher than the eventual fine.

A recent European Union ruling that Apple must pay up to €13-billion in taxes to the Irish government and the forthcoming U.S. election could complicate Deutsche Bank’s efforts to whittle down the demand.

One of Deutsche’s top 10 investors said he expected the bank to have to pay 4-€5.5-billion for the mortgages case. “But because of the election campaign it may end up higher – at maybe 6 or 7 billion.”

In 2014, the DoJ asked Citigroup to pay $12-billion to resolve an investigation into the sale of shoddy mortgage-backed securities, sources said. The fine eventually came in at $7-billion.

In a similar case, rival Goldman Sachs agreed in April to pay $5.06-billion to settle claims that it misled mortgage bond investors during the financial crisis.

Deutsche Bank’s settlement will comprise a different list of recipients from the Goldman case, 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.

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

Deutsche Bank has not said what it has set aside in anticipation of a settlement over the sale and packaging of resident mortgage-backed securities before 2008.

Its overall legal provisions stood at €5.5-billion at the end of June, and according to a person close to the bank 2.5-3 billion of that had been reserved for the mortgages case.

Deutsche was once one of Europe’s most successful players on Wall Street. Like many of its peers, it has since 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 mis-selling of subprime loans and alleged manipulation of foreign exchange rates or gold and silver prices. Other lawsuits are for the rigging of borrowing benchmarks Libor and Euribor, used to set the price of mortgages and derivatives.

In July, Chief Executive Cryan said he hoped to close the four largest remaining litigation cases this year.

These are the mortgages and FX cases, an investigation into suspicious equities trades in Russia and allegations of money laundering.</s>The U.S. Department of Justice is asking Deutsche Bank to pay $14 billion to settle an investigation into its selling of mortgage-backed securities. As Sara Hemrajani reports, the claim far outstrips the bank's and investors' expectations.</s>Deutsche Bank said it had no intentions of paying the $14 billion (£10.6bn) fine sought by the US Department of Justice to settle civil claims regarding its handling of mortgage-backed securities that contributed to the 2008 financial crisis.

The German-based bank is among many financial institutions investigated over dealings in discreditable mortgages in the run-up to the financial crisis. The government has accused the banks of misleading investors about the quality of their loans.

“Deutsche Bank has no intent to settle these potential civil claims anywhere near the number cited. The negotiations are only just beginning. The bank expects that they will lead to an outcome similar to those of peer banks which have settled at materially lower amounts,” Deutsche Bank said in a statement.

The $14 billion fine is more than triple what some Bloomberg analysts estimated.

Deutsche Bank emphasised that negotiations with the Department of Justice have just started and has confirmed it had been invited to submit a counter proposal.

The news of the fine, first reported by the Wall Street Journal, hit Deutsche Bank shares which dropped more than 6 per cent in after-hours trading in the US.

Deutsche Bank previously thought that a settlement between $2 billion and $3 billion would be fair, as it had already paid $1.9 billion in 2013 to resolve similar claims, according to WSJ.

The Department of Justice has taken a tough stance in settlement negotiations with other banks, requesting sums higher than the eventual fine.

In 2014, it asked Citigroup to pay $12 billion to resolve an investigation into the sale of shoddy mortgage-backed securities, sources said. The fine eventually came in at $7 billion.

In a similar case, rival Goldman Sachs agreed in April to pay $5.06 billion to settle claims that it misled mortgage bond investors during the financial crisis.

The news comes at a difficult time for Deutsche Bank.

The German lender has lost about 43 per cent of its market value this year. Net income decreased to €18 million (£15m) from €796 million a year earlier, Deutsche Bank announced in July.

John Cryan, Deutsche Bank chief executive has been cutting risky assets, freezing dividend payments and eliminating about 9,000 staff to boost capital levels.

In June, the International Monetary Fund (IMF) said that of the banks big enough to bring the financial system crashing down, Deutsche Bank was the riskiest.</s>The claim against Deutsche, which is likely to be negotiated in several months of talks, far outstrips the bank's and investors' expectations for such costs.

While it is yet to become clear what the final payment will be, if it were to be as high as $14 billion, this would be a severe strain for Deutsche's fragile finances and would likely further rock investor confidence in the bank.

"Deutsche Bank has no intent to settle these potential civil claims anywhere near the number cited. The negotiations are only just beginning. The bank expects that they will lead to an outcome similar to those of peer banks which have settled at materially lower amounts", Deutsche Bank said in a statement on Friday.

The Department of Justice declined to comment.

The Department of Justice has taken a tough stance in settlement negotiations with other banks, requesting sums higher than the eventual fine.

In 2014, it asked Citigroup ( ) to pay $12 billion to resolve an investigation into the sale of shoddy mortgage-backed securities, sources said. The fine eventually came in at $7 billion.

In a similar case, 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.

A $14 billion fine, or even half that sum, would still rank among one of the largest paid by banks to U.S. authorities in recent years. In 2013, JPMorgan Chase & Co ( ) agreed to pay $13 billion to settle allegations by the U.S. authorities that it overstated the quality of mortgages it was selling to investors in the run-up to the 2008-2009 financial crisis. In 2014, Bank of America Corp. ( ) agreed to pay $16.7 billion in penalties to settle similar charges.

Deutsche Bank has not said what it has set aside in anticipation of a settlement over the sale and packaging of resident mortgage-backed securities before 2008. Its overall legal provisions stood at 5.5 billion euros at the end of the second quarter.

Deutsche was once one of Europe's most successful players on Wall Street. Like many of its peers, it has since 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 euros.

Claims filed by individuals, companies and regulators against Deutsche, outlined in the bank's 2015 annual report, relate to mis-selling of subprime loans and manipulation of foreign exchange rates or gold and silver prices. Other lawsuits 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.

These are the mortgages and FX cases, an investigation into suspicious equities trades in Russia and allegations of money laundering.</s>Deutsche Bank says it will not pay the $14 billion sought by the US Justice Department to settle an investigation into the firm’s sale of residential mortgage-backed securities, a figure that’s more than triple what some analysts estimated could be a potential worst case.

“Deutsche Bank has no intent to settle these potential civil claims anywhere near the number cited,” the company said in a statement early Friday in Frankfurt.

“The negotiations are only just beginning. The bank expects that they will lead to an outcome similar to those of peer banks which have settled at materially lower amounts.”

Germany’s largest lender confirmed that it had started negotiations with the justice department to settle civil claims the US may consider over the bank’s issuing and underwriting of residential mortgage-backed securities from 2005 to 2007.

The $14 billion is considered an “opening bid” that could go “much lower,” according to the Wall Street Journal, which reported the figure shortly before Deutsche Bank issued its statement.

US shares of Deutsche Bank tumbled 6.5 per cent to $13.80 in extended trading in New York. The company’s stock has plunged 42 per cent this year in Germany up to the close of trading on Thursday.

A US justice department spokesman declined to comment on the negotiations.

JPMorgan Chase analysts wrote in a note to clients earlier on Thursday that a settlement of about $2.4 billion “would be taken very positively,” and that an agreement exceeding $4 billion would pose questions about the bank’s capital positions and force it to “build additional litigation reserves”.

Deutsche Bank chief executive John Cryan has struggled to boost profits as unresolved legal probes and claims compound concerns that the lender will be forced to raise capital or sell assets.

Reaching a mortgage deal would clear a major hurdle for the bank, which has paid more than $9 billion in fines and settlements since the start of 2008. – (Bloomberg)</s>The U.S. Department of Justice is asking Deutsche Bank ( ) to pay $14 billion to settle an investigation into its selling of mortgage-backed securities, Germany's flagship lender said on Friday.

The claim against Deutsche, which is likely to be negotiated in several months of talks, far outstrips the bank's and investors' expectations for such costs.

"Deutsche Bank has no intention to settle these potential civil claims anywhere near the figure cited. The negotiations are only just beginning. The bank expects that they will lead to an outcome similar to those of peer banks which have settled at materially lower amounts", Deutsche Bank said.</s>Deutsche Bank AG says it does not intend to pay $14 billion to settle civil claims with the U.S. Department of Justice for its handling of residential mortgage-backed securities and related transactions.

The bank confirmed Friday in a statement that the Justice Department had proposed a settlement of $14 billion and asked the German bank to make a counter proposal.

It described the proposed amount as an "opening position" put forward by the Justice Department in negotiations that were just beginning.

Deutsche Bank is among many financial institutions investigated over dealings in shoddy mortgages in the run-up to the 2008 crisis that led millions of Americans to lose their jobs and sometimes their homes.

The government has accused the banks of misleading investors about the quality of their loans.</s>NEW YORK: Authorities in the US are seeking as much as $14 billion from Deutsche Bank to resolve allegations stemming from the 2008 mortgage crisis, a source close to the matter told AFP on condition of anonymity.

The payout would be the largest ever inflicted on a foreign bank in the United States, easily surpassing the $8.9 billion that the French bank BNP Paribas paid in 2014 for sanctions violations.
The Obama administration through the U.S. Justice Department seeks a fine of $14 billion against Deutsche Bank in regards to mortgage securities.