“DEUTSCHE BANK has no intent to settle these potential civil claims anywhere near the number cited.” Shock may explain the rickety syntax. On September 16th Germany’s largest bank confirmed reports that America’s Department of Justice had asked for $14 billion to settle possible claims connected with the underwriting and sale of residential-mortgage-backed securities (RMBSs) between 2005 and 2007. Deutsche’s share price, already hovering close to record lows after a wretched year, plunged by more than 8%. So did those of other European banks yet to agree terms with the DoJ over RMBSs. Royal Bank of Scotland’s shares dropped by 4.4% and Credit Suisse’s by 4%; Barclays and UBS shed 2%-plus.

American banks have settled with the department for amounts between $3.2 billion (Morgan Stanley) and $16.7 billion (Bank of America), as well as paying smaller sums to the Federal Housing Finance Agency (FHFA), another regulator. Analysts had expected Deutsche’s penalty to be at the bottom of that range, or even below it. Deutsche, which settled for $1.9 billion with the FHFA in 2013, is indeed likely to pay much less than $14 billion for the sins of its swaggering pomp; but it...Continue reading