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Deutsche Bank shares fall after no U.S. deal

Monday, October 10, 2016 - 01:42

Deutsche Bank shares have fallen more than 3 percent after Chief Executive John Cryan failed to secure a speedy deal with the U.S. Department of Justice (DoJ) at the weekend over the misselling of mortgage-backed securities. Sonia Legg reports

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He knew it was going to be a challenge when he took over the top job at Deutsche Bank. But John Cryan may not have expected it to be this tough. Shares in the flagship German lender started the week down again. Investors disappointed that the CEO failed to secure a deal with the U.S. Justice department over misselling of mortage-backed securities. Cryan went to the States to attend the IMF and World Bank's autumn meetings. But many hoped he might negotiate down the $14 billion fine demanded by the DoJ while he was there. Instead all investors got was a warning from the IMF about the weakness of the European banking sector. (SOUNDBITE) (English) INDEPENDENT MARKET ANALYST, JEREMY BATSTONE-CARR, SAYING: "At issue is the weakness ,or profitability, sub standard or low rate of credit growth, and concerns over solvency. My view has always been that the banking sector does not suffer from liquidity but from weak profitability." The plight of Deutsche Bank and Italy's banking sector is also on the agenda at a finance ministers meeting in Brussels. But some think more should have been done sooner. (SOUNDBITE) (English) INDEPENDENT MARKET ANALYST, JEREMY BATSTONE-CARR, SAYING: "I'd certainly agree with the U.S. position that a more fundamental root and branch reform of the euro zone banking sector, involving a thinning down and more streamlining approach is the right way." Deutsche Bank is expected to issue new shares, or sell assets once it knows the scale of the fine. It needs to ensure its capital ratio remains within the regulatory limit. But restoring market confidence is also vital - and that's clearly proving difficult.

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Deutsche Bank shares fall after no U.S. deal

Monday, October 10, 2016 - 01:42