Deutsche Bank’s $14bn scare comes as US ground shifts
Bank CEO may use the trip to IMF and World Bank meetings to continue negotiations with US justice department
WASHINGTON — In August, US Department of Justice officials working on a mortgage securities investigation of Deutsche Bank expected the bank to settle the matter for $2bn to $3bn, according to people with knowledge of the matter. Then came September’s news that the government had opened settlement talks by asking for $14bn, a figure that Deutsche Bank said it would not pay. That September surprise roiled markets and pushed the German lender’s shares to a record low as investors asked whether it would have to raise capital to meet the US demand, even as it grapples with other potentially costly investigations. It is unclear what inspired the justice department’s higher opening gambit. What’s known is that in the previous months, some of the ground had shifted. A reorganisation at the top of the justice department put a different person in charge of mortgage securities investigations. That official, in a recent speech, criticised banks that had not sufficiently co-operated, saying the...
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