At the end of last week, shares in Deutsche Bank rebounded somewhat on the rumor that a settlement had been reached with the US Department of Justice. Stock markets followed. However, the rumour has not been substantiated. So how will the markets react now?
According to the latest from Zero Hedge,
… the AFP “story” of a $5.4 billion revised settlement between DB and DOJ was indeed “sources” on Twitter, and had no basis in reality. The reason: not only has John Cryan barely started the negotiations with the DOJ, and is set to arrive in the US this week to beg for mercy, but as the WSJ, which broke the original settlement story more than two weeks ago just reported, Deutsche Bank’s settlement talks with the DOJ are continuing, “with no deal yet presented to senior decision makers for approval on either side.”
The talks are moving forward, but they have “not progressed to a degree that a proposed deal has reached senior-level review at the Justice Department or with Deutsche Bank’s supervisory board, people familiar with the matter said.”
While there is much more information one could hope for in what is now the most important litigation in capital markets, we will gladly take what the WSJ reports over the market-manipulating garbage spewed by AFP with the sole intent of getting both DB and the market to close higher.
Some more details from the WSJ: “People familiar with the continuing settlement talks say details remain in flux. Justice Department lawyers have floated the possibility of also reaching accords with other European banks who have yet to resolve similar investigations and announce them at once, but no such move is certain, the people say.”
The WSJ also adds that CEO John Cryan plans to be in Washington, D.C. this week for meetings of the International Monetary Fund and World Bank. The visit has stoked speculation that he could delve in person into ongoing talks with the Justice Department. The Deutsche Bank spokesman declined to comment on any matters related to talks with Justice Department.
In addition it is worth remembering that DB capital ratios are below many other comparable banks, as this data from Moody’s shows. DB is 3.4% tier 1.
