Deutsche Bank’s shares are down 8% in pre-market here in the US on the news that the Justice Department requested a $14B settlement in an investigation into the bank’s handling of mortgage-backed securities during in 2008.
DB’s CEO John Cryan dismissed the figure as an opening offer in negotiations and said the bank would not pay anywhere near that amount. The $14B get out of jail (well not really because no one goes to jail) card is curious since it’s the identical amount the EU hit Apple with for back taxes involving Ireland.
DB’s $14B fine would also put it just behind Bank of America, which paid $17B two years ago for Angelo Mozillo’s toxic mortgage transgressions at Countrywide Financial.
The price tag rocked DB’s share price, since Germany’s largest bank has been struggling with liquidity and according to analysts covering the bank, any fine over $4B would be a hardship to Cryan’s beleaguered balance sheet.
Here’s my take on some news that I have written about recently.
Federal regulators are changing how money market funds calculate their net asset values and whether they can “break the buck.” The reg changing liquidity rules at a time historically when liquidity is strained. And now the feds are looking to extract a king’s ransom from a “too big to fail” bank that the street is concerned could actually fail.
Don’t get me wrong I’m not defending DB — never could after my banker suicide stories on the bank — but the timing is curious.