US DoJ asked for $14 billion to settle mortgages case, Deutsche Bank says

The US Department of Justice is reportedly asking Deutsche Bank to pay $14 billion to settle an investigation into the sales of mortgage-backed securities, which played a significant role in the 2008 financial crisis

The claim against Deutsche Bank far outstrips the bank's and investors' expectations for such costs
The claim against Deutsche Bank far outstrips the bank's and investors' expectations for such costs

The US Department of Justice is asking Deutsche Bank to pay $14 billion (€12.45 billion) to settle an investigation into its selling of mortgage-backed securities, Germany's flagship lender said on Friday.

The claim against Deutsche Bank, which is likely to be negotiated in several months of talks, is said to far outstrip the bank's and investors' expectations for such costs.

Reuters news agency reports that while it is yet to become clear what the final payment will be, this would be a severe strain for Deutsche's fragile finances if it were to be as high as $14 billion. In this case, it added, it would likely further rock investor confidence in the bank.

The bank's US-listed shares fell by 8% in after-hours trading.

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

The sale of residential mortgage-backed securities played a significant role in the 2008 financial crisis.

Banks in the US have been subject to a number of investigations over allegations of giving mortgages to unqualified borrowers, then repackaging those loans as safe investments and selling the risk on to others.

A number of banks have settled with US authorities over mis-selling of mortgage-backed securities.

Morgan Stanley, Credit Suisse, HSBC, UBS have all paid out. Goldman Sachs settled for $5.1 billion (€4.54 billion) in January this year.