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Deutsche Bank looks ahead after U.S. settlement

Wednesday, January 18, 2017 - 01:37

Deutsche Bank has finalised a $7.2 billion settlement with the U.S. Department of Justice over its sale of toxic mortgage securities in the run-up to the 2008 financial crisis. But, as Ivor Bennett reports, the banks troubles aren't over yet.

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The bigger they are, the harder they fall... That certainly seems to be true of Deutsche Bank. The giant German lender has agreed to pay 7.2 billion dollars to US regulators over its sale of toxic mortgage securities. Something the department of justice called a direct contribution to the global financial crisis. It's the largest single settlement of its kind. but perhaps not as bad as it could've been, had it come after Donald Trump becomes president. SOUNDBITE (English) SIMON FRENCH, CHIEF ECONOMIST, PANMURE GORDON, SAYING: "This is really driven by politics and the political timetable rather than necessarily the right time for the DoJ to report their findings. And I think it is important that it's got out ahead of the change in the administration." CEO John Cryan issued a statement apologising unreservedly for the bank's conduct. But he also warned, given other lawsuits, it's too early to draw a line under it. Not least on the balance sheet. The bank is estimating a 1.2 billion dollar hit to 4th quarter pretax profits. But some feel there are bigger worries. SOUNDBITE (English) SIMON FRENCH, CHIEF ECONOMIST, PANMURE GORDON, SAYING: "Most people have already factored this in to the bottom line for Deutsche. They'll be much more looking under the hood for net interest margins, the prospects for European growth and some of the rather toxic derivative trades and what ability Deutsche has to start to clean up its balance sheet." In terms of image at least, the clean-up seems to have begun. The bank reportedly set to cut bonuses for senior staff by as much as 90 percent.

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Deutsche Bank looks ahead after U.S. settlement

Wednesday, January 18, 2017 - 01:37