Deutsche Bank shares resumed falling after recovering from a record low at the end of last week, as hopes faded of a swift deal with U.S. authorities over a multi-billion dollar penalty. As Sonia Legg reports, the German lender is throwing its energies into reaching a settlement before next month's U.S. presidential election.
It's not just Trump and Clinton counting down to a November deadline. The Presidential election is also a big deal for Deutsche Bank. Germany's flagship lender is currently facing demands from U.S. authorities for $14 billion for mis-selling mortgage-backed securities. It apparently believes a fairer deal may be harder once there's a new President. (SOUNDBITE) (English) CMC MARKETS ANALYST, JASPER LAWLER, SAYING: "The amount of this fine is going to determine Deutsche Banks' course of action going forward, whether or not they are going to have to raise capital. They have a certain pot of money set aside for regulatory fines at the moment, they are selling some assets so that might be enough to cover a smaller fine so we want some certainty on that." The threat of such a large fine sent Deutsche's shares tumbling to record lows last week. They recovered after a media report suggested the final bill could be around $5.4 billion, but fell again when that wasn't confirmed. Many are looking to its rivals for guidance. Bank of America was fined $16 billion for similar mis-selling and Goldman Sachs between $4 and $5 billion. (SOUNDBITE) (English) CMC MARKETS ANALYST, JASPER LAWLER, SAYING: "It won't be as high as Bank of America - that would be the cause of all sorts of fallout between Germany and the U.S. but I can see it being in the region of 10, which is a lot higher than consensus and that would mean that Deutsche would almost certainly have to raise capital." Deutsche Bank's CEO John Cryan will be in Washington later this week for the annual IMF meeting. It's thought he'll be bringing a team of other executives with him to try and negotiate a more favourable deal. There's a lot a stake - Deutsche Bank may be smaller than its main Wall Street rivals. But it has a significant trading relation with all of the world's finance houses. And that - says the IMF - makes it a bigger potential risk to the wider financial system than any other global bank.