Deutsche Bank is close to an agreement with the United States on the payment of a fine of $ 5.4 billion to settle a real estate litigation dating back to the financial crisis, said on Friday a source close to the folder. This information appeased somewhat the concerns of financial markets, who feared that a fine colossal, eventually, undermine the bank, forcing a rescue public-with significant losses to shareholders and creditors.
An invoice for $ 5.4 billion is well below the 14 billion that was initially requested by the department of Justice (DoJ) and in phase with the $ 5.5 billion set aside by Deutsche Bank to resolve this litigation. An agreement could be announced in the coming days, added the source on condition of anonymity. Nothing is expected this weekend, she added, warning that nothing was final and that the amount could still change.
Contacted, the DoJ, and Deutsche Bank refused to comment.
a Rebound in banks
A Wall Street, shares of Deutsche Bank have flamed 14.11 outstanding% to 13,10 dollars, bringing in their wake the banking stocks, the spectre of a weakening of the global financial sector seeming to get away for the moment. The title of the German bank had ended up on a leap of 6.39 per cent in Frankfurt. JPMorgan Chase has made 1,43% 66,59 dollars, Goldman Sachs 1,46% to 161,27 dollars, Citigroup 3,12% 47,23 dollars, Bank of America 3,23% to 15,65 dollars and Morgan Stanley to 3.29% 32,06 dollars.
In Europe, banking stocks, battered throughout the week, rebounded for the most part in the end of the session Friday. In Paris, BNP Paribas has taken 0.80% to 45,77 euros, Credit Agricole 0.95% at 8,07 euros. In Switzerland, UBS has made a 1.53% to 13,23 swiss francs and Credit Suisse with 0.87% in 12,71 swiss francs, while Santander finished stable to 3.95 euros in Madrid.
concerns surrounding Deutsche Bank have contaminated the entire european banking sector in full restructuring since the violent financial crisis of 2008-2009. “The financial sector is the branch the most sensitive and the most fragile, the uncertainties can quickly have unintended side-effects,” says Robert Halver, analyst of the bank Baader. According to him: “the flap of a butterfly’s wing can cause the eruption of a volcano.”
The IMF estimates that Deutsche Bank is the bank most likely in the world to cause damage, by domino effect, in the event of bankruptcy. Its market capitalization has plummeted recently to about $ 16.9 billion.
“multiple attempts to calm the situation as the government, financial authorities and of Deutsche Bank itself has almost the opposite effect among investors,” says Clemens Bundschuh, analyst of the bank LBBW. This is a view shared by Alexandre Baradez, analyst at IG France. The posture of a status quo adopted by the bank and the German government tend to “maintain concerns over the banks”, argues the expert.
The prospect of a fine colossal had revived the spectre of a capital increase or of a public rescue of the establishment, already in a struggle with a return to half-mast and a very long list of other legal disputes. Investors including a dozen hedge funds had begun to reduce their exposure to the institution, because they fear they will suffer significant losses.
In a letter to employees released Friday, the boss John Cryan has blasted “certain forces in the market, who want to undermine the confidence in us.” In addition to Deutsche Bank, Commerzbank, second largest German bank, is also subject to a decline in the markets after it announced a broad restructuring plan, with approximately 9.600 posts deleted and no dividend until further notice.
“We’ll have to live with a volatility degree”, warned Friday, Martin Zielke, the boss. Deutsche Bank is accused, like other big banks, to have sold to investors before the outbreak of the financial crisis of 2007-2008 residential mortgage loans (RMBS), which are real estate loans converted into financial products, knowing that they were toxic.
Four major u.s. banks, JPMorgan Chase, Citigroup and Morgan Stanley and Bank of America have already agreed to pay a cumulative amount of 40 billion dollars to settle lawsuits related to RMBS. Barclays, UBS, Credit Suisse and Royal Bank of Scotland (RBS) are also in the sights of u.s. authorities.