Deutsche Bank AG’s (NYSE: DB) shares plunged the most since the Brexit vote after the Justice Department is seeking a $14 billion settlement with the German lender over claim tied to mortgage-backed securities.
The demand from the Justice Department far exceeds the bank’s expectations. The company said it just began negotiations with the government and wanted to push back strongly against it.
“Deutsche Bank has no intent to settle these potential civil claims anywhere near the number cited,” the company said in a statement early Friday in Frankfurt. “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 shares traded in New York fell as much as 9.5 percent to $13.36, the biggest drop since June 27.
Other big U.S banks also have paid multibillion-dollar to settle claims that they misleading investors about the risk of mortgage-backed securities and artificially propping up the U.S. housing market that lead to the subsequent collapse.
In 2014, Bank of America Corp. paid $16.65 billion to reach a settlement, the biggest so far. Goldman Sachs Group Inc. agreed to pay a $5 billion in April, including a $2.4 billion civil penalty and $875 million in cash payments. J.P. Morgan Chase & Co. Citigroup Inc. and Morgan Stanley together paid more than $23 billion fine.
“Obviously I don’t like this amount, it’s too high and i seems that with every settlement, the DOJ wants to get more from European companies,” said Andreas Domke, a portfolio manager at Allianz Global Investors, which owns shares in the lender. “It’s good that Deutsche Bank is pushing back.”