by Kathrin Jones and Christian Kraemer
FRANKFURT (Reuters) – Deutsche Bank announced on Friday that it had reached an agreement in principle with the u.s. department of Justice to settle in exchange for $ 7.2 billion in the litigation over the sale of financial securities risk asset-backed real estate lending “subprime” between 2005 and 2007.
The German bank said that it has agreed to pay a civil penalty of $ 3.1 billion (about 2,97 billion euros) and fund to the tune of $ 4.1 billion ($ 3.93 billion approximately) measures of compensation to its customers (in the form in particular of changes in loans and aid to homeowners and the borrowers over five years, indicates the bank in its press release).
Deutsche Bank underlines that there is still only an agreement in principle “without insurance” with respect to a definitive agreement, but which plans, however, provision in the fourth quarter a pre-tax charge of $ 1.17 billion.
source close to the financial institution, it is specified that the first private bank in Germany is not planning to proceed with a capital increase to cope with these billions of dollars of expenses.
The bank expects that a definitive agreement will be finalized before the inauguration of Donald Trump at the white House, scheduled for 20 January, added the source.
No comment could be obtained from the u.s. department of Justice.
in Mid-September, the us administration had requested $ 14 billion to settle the appeal on the sale of asset-backed securities mortgage bad before the outbreak of the crisis of “subprime”. “The negotiations have only just begun”, which had replicated the management of the bank.
The magnitude of the penalty initially sought by the department of Justice had destabilized the Deutsche Bank, dropping its price and adding an additional factor of fragility in the banking sector.
The lawsuit in the Us against many banks, u.s. or foreign, are based on the marketing of financial products backed by “subprime” mortgage, these mortgages offered in the United States to borrowers that are insolvent and are based on estimates and overstated real property.
In 2012, Barack Obama claimed accounts of the banking sector to be distributed without warning investors that they were related to these doubtful receivables. These “toxic” financial products have greatly contributed to the financial crisis of 2007-2009.
other institutions being prosecuted for similar practices have had to negotiate with the Justice department.
Of the big u.s. banks have already had to settle tens of billions of dollars to settle disputes the same, such as JPMorgan Chase & Co, which agreed to pay $ 13 billion in 2013, Bank of America, sentenced to a fine of $ 16.65 billion, or even Goldman Sachs, which traded at $ 5 billion.
And new procedures are in progress. The department of Justice filed Thursday an action for fraud against the british bank Barclays.
Credit Suisse a-t-we learned this week from a source close to the folder, continues on his side of the negotiations on the basis of a fine to be proposed between 5 and 7 billion dollars (4.8 and 6.7 billion euros) by the department of Justice.
(with Arno Schütze, Frankfurt, Karen Freifeld in New York and Anya George Tharakan in Bangalore; and Veronique Tison and Henri-Pierre André for French service)