Deutsche Bank to fight $14 billion demand from U.S. authorities

[Independent voter]

After 30 years of doing business in Ireland, the EU demands $14 billion from Apple.

You think the two are connected? Whenever we block a shipment from Mexico, for reasons like they didn't put "made in Mexico" on the product or whatever, Mexico makes sure they block something of ours going to Mexico matching dollar for dollar.

Is it payback?




http://www.reuters.com/article/us-de...-idUSKCN11L2VQ

Deutsche Bank (DBKGn.DE) said it would fight a $14 billion demand from the U.S. Department of Justice to settle claims it missold mortgage-backed securities, a shock bill that raises questions about the future of Germany's largest lender.

The claim against Deutsche, which is likely to trigger several months of talks, far exceeds the bank's expectations that the DoJ would be looking for a figure of only up to 3 billion euros ($3.4 billion).

The demand adds to the problems facing Deutsche Bank's Chief Executive John Cryan, a Briton who has been in the job for a year.

The bank only scraped through European stress tests in July and has warned it may need deeper cost cuts to turn itself around after revenue fell sharply in the second quarter due to challenging markets and low interest rates.

Deutsche Bank shares, which have lost around half their value this year, tumbled 7.6 percent to 12.10 euros in Frankfurt on Friday, with analysts saying the bank may need to raise fresh funds from investors or sell assets to shore up its capital ratios.

The cost of insuring Deutsche Bank debt against default rose by around eight percent.

The bank, which employs around 100,000 people, said it regarded the DoJ demand as an opening shot.

"Deutsche Bank has no intent to settle these potential civil claims anywhere near the number cited," it said in a statement.

"The negotiations are only just beginning. The bank expects that they will lead to an outcome similar to those of peer banks which have settled at materially lower amounts."

Analysts said that even a hefty reduction in the bill was likely to weigh heavily on Deutsche Bank's finances.

"If the final bill is at 5 billion euros or more Deutsche Bank will not be able to avoid a capital hike anymore," said Ingo Frommen, banking analyst at LBBW.

POLITICAL BACKING?

Deutsche Bank's problems are likely to alarm political leaders in Europe's largest economy and the home to the European Central Bank.

The German finance ministry said on Friday that the government expected a "fair result" from the negotiations but that the talks were a matter for the bank and the American authorities.

Finance minister Wolfgang Schaeuble took the unusual step of voicing public support for the bank earlier this year and a senior opposition figure said he expected the government to step in as a last resort if needed.

"The question would be how much damage would it do to the economy if the bank were to topple," said Green Party financial spokesman Gerhard Schick.

The DoJ has taken a tough stance in settlement negotiations with other banks, requesting sums higher than the eventual fine.

A recent European Union ruling that Apple (AAPL.O) must pay up to 13 billion euros in taxes to the Irish government and the forthcoming U.S. election could complicate Deutsche Bank's efforts to whittle down the demand.

One of Deutsche's top 10 investors said he expected the bank to have to pay 4-5.5 billion euros for the mortgages case. "But because of the election campaign it may end up higher - at maybe 6 or 7 billion."

In 2014, the DoJ asked Citigroup (C.N) to pay $12 billion to resolve an investigation into the sale of shoddy mortgage-backed securities, sources said. The fine eventually came in at $7 billion.

In a similar case, rival Goldman Sachs (GS.N) agreed in April to pay $5.06 billion to settle claims that it misled mortgage bond investors during the financial crisis.

Deutsche Bank's settlement will comprise a different list of recipients from the Goldman case, a source close to the matter said, adding that the lender had already settled some claims three years ago.

In late 2013, Deutsche Bank agreed to pay $1.9 billion to settle claims that it defrauded U.S. government-controlled Fannie Mae and Freddie Mac, America's biggest providers of housing finance, into buying $14.2 billion in mortgage-backed securities before the 2008 financial crisis.

LIST OF LEGAL PROBLEMS

A $14 billion fine, or even half that sum, would still rank among one of the largest paid by banks to U.S. authorities in recent years.

Deutsche Bank has not said what it has set aside in anticipation of a settlement over the sale and packaging of resident mortgage-backed securities before 2008.

Its overall legal provisions stood at 5.5 billion euros at the end of June, and according to a person close to the bank 2.5-3 billion of that had been reserved for the mortgages case.

Deutsche was once one of Europe's most successful players on Wall Street. Like many of its peers, it has since faced a slew of lawsuits that often trace back to the boom years before the crash. Its litigation bill since 2012 has already hit more than 12 billion euros.

Claims filed by individuals, companies and regulators against Deutsche, outlined in the bank's 2015 annual report, relate to mis-selling of subprime loans and alleged manipulation of foreign exchange rates or gold and silver prices. Other lawsuits are for the rigging of borrowing benchmarks Libor and Euribor, used to set the price of mortgages and derivatives.

In July, Chief Executive Cryan said he hoped to close the four largest remaining litigation cases this year.

These are the mortgages and FX cases, an investigation into suspicious equities trades in Russia and allegations of money laundering.

[Sunseeker]

More than likely it's not payback, but that the reality is probably close to everyone is really screwing everyone else all the time.

[Zelorra]

It's not payback, unless you consider payback when IRS knocks on your door and tells you to fucking pay the actual taxes you needed to pay in the last 500 years, taxes which you avoided one way or the other. It's more a discussion about GREED and what companies do to squeeze every cent in every way, even though they make hundreds of billions of whatever...

[Deleted]

It is the US asking for a bribe to stop the investigation and is at best petty revenge for Apple. Citi group only had to pay 7bn, Goldman sachs 5 billion.

[TrumpIsPresident]

This cant be true.

Apple is the official phone of the occutarding anti-capitalist millennial revolution.

How could they be guilty of "corporate greeedddd mannnnn".

Next you're going to tell me that Twitter isn't paying their janitors $250,000 a year salaries and that Starbucks isn't transporting their coffee beans across the ocean in solar powered container ships.

Pfff ...$14 billion? ...make it $400 billion. Fuck Apple.

They should have been sued into bankruptcy years ago for their tax dodging, bullshit planned obsolesce software practices, anti-3rd party service monopoly, and data usage theft.

[Destump]

I really do not understand why bailed out companies are allowed to keep leading themselves. If a company needs a bailout, then the ownership should go to the organization/government that bailed them out, and keep all the profits until that company has paid 100% of the bailout back.

[Shadowspire]

I really do not understand why bailed out companies are allowed to keep leading themselves. If a company needs a bailout, then the ownership should go to the organization/government that bailed them out, and keep all the profits until that company has paid 100% of the bailout back.

While this makes a bit of sense, I think that would look like a country is trying to control the free market and becoming facist or dictatorish, so most of the time it's a slap on the hand and told not to fuck up next time. Which seems to happen every 10-20 years...

[Miyagie]

This cant be true.

Apple is the official phone of the occutarding anti-capitalist millennial revolution.

How could they be guilty of "corporate greeedddd mannnnn".

Next you're going to tell me that Twitter isn't paying their janitors $250,000 a year salaries and that Starbucks isn't transporting their coffee beans across the ocean in solar powered container ships.

Pfff ...$14 billion? ...make it $400 billion. Fuck Apple.

They should have been sued into bankruptcy years ago for their tax dodging, bullshit planned obsolesce software practices, anti-3rd party service monopoly, and data usage theft.

Dont forget the hidden GPS traking.

[Dezerte]

While this makes a bit of sense, I think that would look like a country is trying to control the free market and becoming facist or dictatorish, so most of the time it's a slap on the hand and told not to fuck up next time. Which seems to happen every 10-20 years...

Governments bailing out companies is about as anti-free market as you get.

[Hooked]

I don't like the idea of suing other countries because it could easily be used against us. Another example of the push towards cultural Marxism and the new world order. Only beta cucks sue other countries, real men kick their asses.

[Shadowspire]

Governments bailing out companies is about as anti-free market as you get.

Bailing out keeps them afloat, what the guy quoted suggest is the government actually owning them and not just keeping them alive for the countries interest. America is t the only country to do this.

[Theinquisition]

Bailing out keeps them afloat, what the guy quoted suggest is the government actually owning them and not just keeping them alive for the countries interest. America is t the only country to do this.

I'd rather see failing business go under, but that's just me.

[Shadowspire]

I'd rather see failing business go under, but that's just me.

Double edge sword. Yes big companies falling means maybe small businesses can grow, but that fall makes a giant creator in employed ppl who aren't at the top and probably sets a country back a few years, and God forbid if it's a tech company, that sets back in technology.

These are just average educated guesses on why they are bailed out. So unless you like anarchy and a country having a fall in money(that again would mostly effect the middle-poor class) wanting them to fail is not good,

[zealo]

I'd rather see failing business go under, but that's just me.

The thing is, not bailing institutions like banks out pose a very real chance of triggering a recession if they're big enough. It's a careful balancing act whether it's actually worth letting them go.

[Theinquisition]

Double edge sword. Yes big companies falling means maybe small businesses can grow, but that fall makes a giant creator in employed ppl who aren't at the top and probably sets a country back a few years, and God forbid if it's a tech company, that sets back in technology.

These are just average educated guesses on why they are bailed out. So unless you like anarchy and a country having a fall in money(that again would mostly effect the middle-poor class) wanting them to fail is not good,

I'm fairly confident they would have had their assets bought out. Even if not, I'm not keen on the idea of bailouts.

[Shadowspire]

I'm fairly confident they would have had their assets bought out. Even if not, I'm not keen on the idea of bailouts.

It doesn't mean the assets will be used in the same manner. Take, fir gaming equivalent, THQ, not all of thier assets were bought and the ones that were not all used or even build up on.

[Skroe]

It's not payback, but the EU's little crusade against Apple, Google and other US Tech firms is totally about trying to take the American tech dominance down a notch and protect the rather decrepit and insignificant European tech sector.

It won't help. Europe lacks the capital and university system. Too much regulation. Tons of reasons.

[Dezerte]

Bailing out keeps them afloat, what the guy quoted suggest is the government actually owning them and not just keeping them alive for the countries interest. America is t the only country to do this.

Yeah, it's a difficult position to be in for sure. But it certainly is anti-free market to not let them fail as they should. Many countries do this, as you said, which makes it a bit tiresome when people claim these countries are free market. Most, if not all, countries have a controlled market - because free market doesn't really work.