Deutsche Bank is bracing for another pivotal week as the German giant negotiates with the US Department of Justice to talk down a $14bn fine.
Senior figures including chief executive John Cryan are expected to be in the United States this week, coinciding with meetings of the World Bank and the International Monetary Fund. Mr Cryan spent much of last week in Arizona, reassuring clients about the strength of the bank on the sidelines of the firm’s leveraged finance conference.
Shares in Germany’s biggest bank rocketed more than 6pc higher late on Friday, reversing the week’s losses, on reports that the American authorities were preparing to slash the penalty imposed on the bank for mis-selling mortgage-backed securities to $5.4bn.
Mr Cryan has said publicly that the bank has an “extremely comfortable” liquidity reserve in a move designed to prevent customers from rushing to the exit, and business leaders from across Germany have this weekend rallied around the institution.
In interviews with Frankfurter Allgemeine Sonntagszeitung, leaders of companies including Daimler, Munich Re, Siemens and Deutsche Boerse suggested a national lender remained attractive and important to their firms.
“The German industry needs a German bank that accompanies us out into the world,” BASF chairman Juergen Hambrecht told the newspaper. “The power games out there in the market aren’t transparent, but they’re there.”
The bank’s shares have lost more than half of their value so far this year on growing concerns about the strength of its capital buffers. The surprisingly large US fine floated last month would dwarf the €5.5bn set aside by the bank for litigation and other provisions in its July results, which showed a 99pc decline in profits.
The sell-off in Deutsche Bank stock accelerated last Thursday after news emerged of 10 hedge funds cutting back their cash balances with the bank, prompting Mr Cryan’s public statement about capital reserves.
As well as the US regulatory talks, Deutsche Bank and five former executives have been charged over the weekend in Italy on charges linked to the 2008 accounts of Monti dei Paschi di Siena.
The bank said it will put forward its defence in court and declined to comment further.
Tags: BASF, Daimler, Deutsche Bank, Deutsche Boerse, Frankfurter Allgemeine Sonntagszeitung, International Monetary Fund, John Cryan, Juergen Hambrecht, Munich Re, Siemens, US Department of Justice, World Bank