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U.S. targets Commerzbank and DB - sources

Tuesday, Jul 08, 2014 - 02:09

After BNP, Germany's Commerzbank and Deutsche Bank appear to be next in the line of fire of the U.S authorities over their alleged dealings with blacklisted countries, with both facing major fines, according to sources speaking to Reuters. Melanie Ralph reports.

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Fears of more fines hitting banking sector heavyweights are making investors nervous. Sources told Reuters that Commerzbank and Deutsche Bank are in settlement talks with U.S Regulators. And the New York Times is reporting that Commerzbank is accused of having transferred money through its U.S operations on behalf of companies in blacklisted countries like Iran and Sudan. The rumored fine for Commerzbank is in the region of half a billion dollars. Compared to BNP's nine billion dollar fine last month, that's not too bad. As with BNP 'though, the fear now is the fines could get bigger as the weeks go by. Not to mention MORE banks facing penalties. Shares in both banks were down sharply on the news - dampening the mood of European stock markets. Reuters banking correspondent, Steve Slater. (SOUNDBITE) (English) STEVE SLATER, EMEA BANKING CORRESPONDENT, REUTERS, SAYING: ''What is factored in is that where will be more fines, but the scale of them, no one knows, and that's one of the big uncertainties in the market at the moment. When you're talking about nine billion dollar fines it becomes a material impact to capital and to rebuilding that capital, which politicians say restricts banks ability to lend, so then it becomes political as well.'' Commerzbank has over a billion dollars set aside for litigation costs and possible fines. With the German government owning 17 percent of Commerzbank, there could be political ramifications too at a time when the German-U.S. relationship is already under strain It raises the questions over whether the U.S is exploiting the dominance of the U.S dollar to impose its own rules and standards on foreign firms. (SOUNDBITE) (English) STEVE SLATER, EMEA BANKING CORRESPONDENT, REUTERS, SAYING: ''There is a feeling in Europe that the U.S. is over-stepping its reach and targeting European banks more, but the U.S banks have been hit very hard with very big fines and they seem more advanced along the path of paying costs for litigation and fines than the European banks. I think banks on both side of the Atlantic still probably have some more fines to pay.'' Commerzbank isn't the only one that could be clobbered by U.S authorities. Lloyds Banking Group, Credit Suisse and Standard Chartered have all settled. And Credit Agricole and SocGen are also thought to be under investigation for money laundering or sanctions violations.

U.S. targets Commerzbank and DB - sources

Tuesday, Jul 08, 2014 - 02:09

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