Deutsche Bank shares plunge 8%

Shares in Germany's biggest lender Deutsche Bank plunged in Frankfurt on Friday morning on news that US authorities were seeking a record $14 billion fine, opening 8 percent lower.

In an overnight statement, the bank called the US Department of Justice's (DoJ) 12.5-billion-euro claim in relation to the 2008 mortgage crisis an "opening position", saying it expected to reach a "materially lower" figure in negotiations.

The DoJ had invited it to submit a counter-offer, it said.

"Deutsche Bank has no intention to settle these potential civil claims anywhere near the number cited," it said in the statement, noting that "peer banks" had agreed much less onerous deals.

The bank's shares clawed back some losses after the initial sell-off, standing down 6.5 percent by 0840 GMT at 12.27 euros.

Deutsche Bank is among several major financial institutions accused by US authorities of misleading investors about the values and quality of complex mortgage-backed securities sold before the 2008 financial crisis.

Much of the underlying lending was worthless or fraudulent, delivering billions of dollars in losses to bond holders when the housing market collapsed, bringing down numerous banks and touching off the US' worst recession since the 1930s.

Analysts believe that Deutsche Bank will negotiate a final settlement that is far smaller than the figure sought.

"It probably won't reach $14 billion if you compare it with other banks that were active in this business," analyst Robert Halver of Baader bank told AFP.

"We're counting on more like $5.0 billion. But of course, $5.0 billion is still painful."

A double-digit payout would be the largest ever inflicted on a foreign bank in the United States, easily surpassing the $8.9 billion that the French bank BNP Paribas paid in 2014 for sanctions violations.

US investment bank Goldman Sachs in April agreed to pay more than $5 billion to settle similar allegations.

Deutsche Bank has set aside $5.5 billion to resolve a backlog of pending legal matters while it goes through a painful restructuring.

It is mired in around 6,000 legal cases worldwide, and has already paid out billions to regulators over interest rate fixing and sanctions violations.

The bank's share price currently stands at around 10 percent of its pre-crisis value.

Source: AFP