IFM Correspondent

December 23, 2016: Deutsche Bank AG said it reached a $7.2 billion agreement to resolve a year-long U.S. investigation into its dealings in mortgage-backed securities, removing a legal hurdle that fuelled investor angst.

Deutsche Bank will pay a $3.1 billion civil penalty and provide $4.1 billion in relief to consumers under a settlement in principle with U.S. authorities. While the deal is below the Justice Department’s initial request of $14 billion, Germany’s biggest lender still faces U.S. investigations into other matters and potentially expensive civil suits. John Cryan, CEO, Deutsche Bank, has made resolving litigation a priority.

“The financial consequences, if any, of the consumer relief are subject to the final terms of the settlement, and are not currently expected to have a material impact on 2016 financial results,” the bank said.

There were concerns that Deutsche Bank may not be having enough capital when the bank said in September that the U.S. Justice Department had made the opening request of $14 billion and that it had no intention of paying that amount.

Deutsche Bank also faces civil lawsuits related to claims that its traders manipulated key interbank interest rates. It isn’t clear how much more wrapping up these cases will cost.

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