Deutsche Bank was subject to numerous settlements in the last couple of years, which cost the bank billions of dollars. These settlements were made because of the manipulation of global interest rates as well as activities performed by the bank in the foreign exchange rate. Additional burden, has been the changes in the existing regulation, which increase the compliance cost.
In light of the constant settlement Deutsche bank has been paying during the last couple of year, the newest fine was the one announced by the U.S. Department of Justice. Thus, becoming one of the most popular topic in the last couple of weeks. The Department of Justice stated that they would demand for a $14 billion of fine to be paid by the the Bank. Deutsche bank is going to be fined by the DOJ regarding its mortgage lending activities during the housing bubble. Investors fear has been that Deutsche Bank would need a bailout package. Thus caused even further decrease of its share price, reaching a thirty years low.
The magnitude of the proposed fine claimed by the DOJ meant that Deutsche bank would be faced with insufficient funds to pay for the gigantic fine.
But in light of the skepticism, the newest update is that the Bank will settle the fine with DOJ. The positive outcome for the bank is that the settlement would be executed at a much lower fine that the expected $14 billion. Expectations are that Deutsche Bank would settle with the DOJ for a sum of around $5 billion, although this is not officially confirmed by the bank or DOJ.
Unconfirmed expectations that the settlement would be much lower than the initially expected, resulted in increase of Deutsche Bank shares by 14%.
Now the investors are expecting the official confirmation regarding the size of the settlement.