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Deutsche Bank (DB) Nearing $2.4B Pact to Settle RMBS Case
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Deutsche Bank AG (DB - Free Report) may have to shell out around $2.4 billion as it nears a settlement with the U.S. Department of Justice (DoJ) related to the investigation into the sale of residential mortgage-backed securities (RMBS), according to sources acquainted with the matter.
Earlier on Friday, without mentioning sources, Manager Magazin reported that the DoJ will send a statement of facts covering 100 pages to the bank, beginning this week. The German magazine also mentioned that Deutsche Bank’s fine may exceed The Goldman Sachs Group, Inc.’s (GS - Free Report) penalty of $2.38 billion.
Other major banks that have previously reached settlements with authorities tied with RMBS misconduct, include Citigroup Inc. (C - Free Report) , JPMorgan Chase & Co. and Bank of America Corp.
The resolving of this case will come as great respite for the Deutsche Bank which has shouldered significant legal settlement in the past that have affected its financials as well. Notably, marking the company’s first full-year loss since 2008, the bank reported net loss of €6.8 billion in 2015, reflecting the impact of several one-time items, including huge litigation charges. The company continues to struggle with numerous other cases, such as alleged manipulation of foreign exchange rates, rigging bench mark rates and investigations over suspicious ‘mirror’ trades in Russia.
Chief Executive Officer John Cryan, who is expediting restructuring efforts to boost the bank’s performance, had stated earlier that though litigation issues will remain a headwind, he expects to resolve the company’s significant cases this year.
Apart from legal headwinds, profitability of Deutsche Bank also remains threatened by the stressed operating environment with negative interest rates, sluggish European economy and global headwinds. Management continues to see a challenging revenue environment in 2016, specially post Brexit.
Investors’ concern over the growth prospects of this German banking giant is reflected as it has lost more than 35% on the NYSE, year to date.
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Deutsche Bank (DB) Nearing $2.4B Pact to Settle RMBS Case
Deutsche Bank AG (DB - Free Report) may have to shell out around $2.4 billion as it nears a settlement with the U.S. Department of Justice (DoJ) related to the investigation into the sale of residential mortgage-backed securities (RMBS), according to sources acquainted with the matter.
Earlier on Friday, without mentioning sources, Manager Magazin reported that the DoJ will send a statement of facts covering 100 pages to the bank, beginning this week. The German magazine also mentioned that Deutsche Bank’s fine may exceed The Goldman Sachs Group, Inc.’s (GS - Free Report) penalty of $2.38 billion.
Other major banks that have previously reached settlements with authorities tied with RMBS misconduct, include Citigroup Inc. (C - Free Report) , JPMorgan Chase & Co. and Bank of America Corp.
The resolving of this case will come as great respite for the Deutsche Bank which has shouldered significant legal settlement in the past that have affected its financials as well. Notably, marking the company’s first full-year loss since 2008, the bank reported net loss of €6.8 billion in 2015, reflecting the impact of several one-time items, including huge litigation charges. The company continues to struggle with numerous other cases, such as alleged manipulation of foreign exchange rates, rigging bench mark rates and investigations over suspicious ‘mirror’ trades in Russia.
Chief Executive Officer John Cryan, who is expediting restructuring efforts to boost the bank’s performance, had stated earlier that though litigation issues will remain a headwind, he expects to resolve the company’s significant cases this year.
Apart from legal headwinds, profitability of Deutsche Bank also remains threatened by the stressed operating environment with negative interest rates, sluggish European economy and global headwinds. Management continues to see a challenging revenue environment in 2016, specially post Brexit.
Investors’ concern over the growth prospects of this German banking giant is reflected as it has lost more than 35% on the NYSE, year to date.
DEUTSCHE BK AG Price
DEUTSCHE BK AG Price | DEUTSCHE BK AG Quote
Deutsche Bank currently carries a Zacks Rank #5 (Strong Sell). Itaú Unibanco Holding S.A. (ITUB - Free Report) is a better-ranked stock in the foreign banks space, sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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