European stocks dip down as Deutsche Bank AG (DBK; DB) is up
for a $14 billion U.S. Justice Department settlement for mortgage-backed
security claims.
The FTSE 100 slipped 0.3% to 6, 712.98 while the Stoxx
Europe 600 (SXXP) fell 0.2% to 339.55, except the health care group of both exchanges
which posted modest gains. Shares of Royal Bank of Scotland (RBS) and Barclays
(BARC; BCS) slid to 4.1% and 2.1% respectively.
Also, other bank shares were trading lower. Standard Chartered
PLC (STAN) was off 2.7%; HSBC PLC (HSBC; HSBA) down 0.7%; Lloyds Banking Group
PLC with a modest dip of 0.3%.
“Deutsche Bank has no intent to settle these potential civil
claims anywhere near the number cited. The negotiations are only just
beginning,” the German bank said in a statement.
Analysts think that the settlement amount was way above
their expectations but may just be a gateway for further discussions between
the two parties. Given the case, anxiety over other European banks to face
similar claims still intensifies.
Investigations by the U.S. Justice Department are connected
with the bank’s issuance and underwriting of residential mortgage-backed
securities between 2005 and 2007.
The German bank expects to end the negotiation with a
materially lower amount as with banks that faced the same claim from the
Justice Department.
In January, Goldman Sachs Group Inc. (GS) settled claims for
$5.1 billion while J.P. Morgan Chase & Co. (JPM) paid a $13 billion fine in
2013. In 2014, Wall Street bank Citigroup Inc. (C) was asked to pay $12 billion
to settle mortgage probe, but ended up paying only $7 billion.
The Deutsche Bank settlement was said to be the largest fine
put forward by U.S. authorities after financial crisis. But analysts estimate
that the bank will settle the investigation at “somewhere around the third” of
the suggested $14 billion fine.
Online media is flooded with finance news here and there.
However, Trade12 gives you the
freshest update in the market daily. Trade12 provides
daily market charts as well. Visit Trade12 now!
Financial trouble? Let Exo
Capital Markets manage your funds accordingly. Exo Capital Markets strives to become the
leading financial services firm by offering its clients with the most modern
solutions in the industry.