Deutsche Bank pays $1.9bn to settle US suit

Comment on this story


Deutsche Bank logo.

Frankfurt - Deutsche Bank AG will pay 1.4 billion euros ($1.9 billion) to settle claims it didn’t provide adequate disclosure about mortgage-backed securities sold to Fannie Mae and Freddie Mac.

The agreement with the Federal Housing Finance Agency covering the period 2005 to 2007 resolves Deutsche Bank’s largest mortgage-related litigation case, the Frankfurt-based company said in a statement on its website today.

Europe’s biggest investment bank by revenue is grappling with legal issues stretching from the US housing market to the alleged manipulation of benchmark interest rates.

The settlement follows similar agreements UBS AG and JPMorgan Chase & Co Inc. struck with US regulators for mortgage-backed debt sold during the country’s housing bubble.

“Investors want to see legal problems being dealt with,” Stefan Bongardt, an analyst with Independent Research GmbH in Frankfurt who has a hold recommendation on the stock, said by telephone.

“The sum is slightly higher than we expected, but it is better to get these kind of things out of the way rather than spend months haggling over a few hundred million.”

Deutsche Bank’s shares rose 0.8 percent to 33.80 euros at 2:33 p.m. in Frankfurt, valuing the company at 34.5 billion euros.

The settlement is “substantially reflected” in funds set aside for legal costs and “no material additional” reserves are necessary in this case, Deutsche Bank said.

The company increased reserves for litigation expenses by 1.2 billion euros to 4.1 billion euros at the end of September from June.

Banks may pay a total $27 billion to settle lawsuits with the Federal Housing Finance Agency, according to data and company filings compiled by Bloomberg last month. - Bloomberg News

sign up

Comment Guidelines

  1. Please read our comment guidelines.
  2. Login and register, if you haven’ t already.
  3. Write your comment in the block below and click (Post As)
  4. Has a comment offended you? Hover your mouse over the comment and wait until a small triangle appears on the right-hand side. Click triangle () and select "Flag as inappropriate". Our moderators will take action if need be.


Join us on

IOL-Social networks IOL-Social networks IOL-Social networks IOL-Social networks