Deutsche Bank stock continues fall amid US settlement talks

Deutsche Bank’s negotiations with the US justice department to resolve a years-long investigation into the lender’s handling of mortgage-backed securities are continuing, according to people familiar with the matter.

Germany's Bild newspaper reported in its Sunday edition that chief executive John Cryan wasn't able to reach an agreement with the justice department during a meeting in Washington.

He was there to help negotiate potential multibillion-dollar penalties, according to the report. The German lender and US authorities haven’t broken off their talks, said the people, who asked not to be identified because discussions are private.

Concerns about the bank’s ability to pay a $14 billion opening settlement bid from the justice department sent the company’s stock to a record low last month.

Scale back

Cryan has said he expects US authorities to scale back the initial request. A Deutsche Bank spokesman declined to comment on the status of talks and on Bild's article.

A representative for the justice department declined to comment when contacted after the newspaper report.

The shares fell 3 per cent to €11.73 at 9:08 am in Frankfurt. They have dropped about 48 per cent this year.

The bank, which set aside €5.5 billion ($6.2 billion) for litigation at the end of June, may face additional penalties to wrap up other outstanding investigations, including a money-launder inquiry tied to its Russia operations.

Analysts at Barclays speculate that could cost the bank as much as €2 billion.

Exploring Options

Cryan, a Briton who speaks fluent German, has sought for the past three weeks to reassure investors that Deutsche Bank can weather the formidable obstacles to its financial health.

The bank is holding informal talks with Wall Street firms about options to deal with legal costs, including a stock sale that could raise €5 billion, people with knowledge of the matter said last week.

Qatar’s royal family is also considering increasing its stake in Deutsche Bank to as much as 25 per cent, according to people with knowledge of the matter.

Cryan has said the lender may not post a profit this year after its first annual loss since 2008 last year.

With plans to eliminate thousands of jobs and cut risky assets, he called 2016 a peak restructuring year. – (Bloomberg)