New York: Deutsche Bank AG was asked by the US justice department to pay $14 billion to settle a probe into the sale of residential mortgage-backed securities, the Wall Street Journal reported.
The figure is considered an “opening bid” that could go “much lower,” the newspaper said Thursday, citing people close to the negotiations between the government and Germany’s biggest bank. US shares of Deutsche Bank tumbled 5.7% to $13.92 in extended trading at 5:52 pm in New York.
Deutsche Bank chief executive officer John Cryan has struggled to reverse a slump in its stock this year, as unresolved legal probes and claims compounded concerns that the lender will be forced to raise capital. Reaching a US settlement over mortgages would clear a major hurdle for the Frankfurt-based bank, which has paid more than $9 billion in fines and settlements since the start of 2008.
Earlier on Thursday, JPMorgan Chase & Co. analysts wrote in a note to clients that a settlement of about $2.4 billion “would be taken very positively,” but 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 and the US justice department had no immediate comment. Bloomberg