Deutsche Bank has been told to pay $14bn to settle an investigation into mortgage-linked financial products. But the German bank said it had “no intention to settle these potential civil claims anywhere near the number cited”. Its shares tumbled 8% in trading on Friday morning as the scale of the claim came in well ahead of expectations. Deutsche said negotiations had only just started with U.S.regulators and it expected to pay a sum comparable to other lenders being punished over the 2008 financial crash.
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
Troubled Deutsche has seen profits tumble amid a tough business climate and major restructuring which has seen thousands of jobs axed. Its problems prompted the International Monetary Fund to describe it earlier this year as a “major systemic risk” to the global financial system. The investigations date back to banks’ behaviour during the financial crisis when they sold investments backed by risky mortgage loans which went bad. In 2014, US bank Citigroup settled a probe into mortgage-backed securities for $7bn (£5bn) while in a similar case this year, Goldman Sachs agreed to pay $5bn (£4bn).