Deutsche Bank is among many financial institutions investigated over dealings in shoddy mortgages in the run-up to the 2008 financial crisis.
Deutsche Bank's attempt to negotiate a lower settlement will likely trigger several months of talks, which could further erode its share price. Federal regulators have been looking to settle with Deutsche Bank, as it has done with other major Wall Street firms, for its role in the mortgage bubble and financial crisis.
According to the article, the shares issued in the rights issue have lost nine-tenths of their value, and the investors who bought them now want to be compensated.
The U.S. -listed shares of Deutsche Bank dropped $1.46, or 10 percent, to $13.30 after the bank said it did not intend to pay the $14 billion settlement that the U.S. government asked for.
FILE - In this December 10, 2015 file photo the headquarters of Deutsche Bank is photographed in Frankfurt, Germany.
Through the rosiest colored glasses, one might say that things at Deutsche Bank have been really, massively, insanely bad of late.
Several banks in the USA have been subject to various investigations over alleged mortgages to unqualified borrowers and repackaging of those loans as safe investments and selling the risk on to others. Their shares also fell 2.8 percent, 2.9 percent and 5.2 percent respectively on Friday.
On the floor of the Frankfurt stock exchange, analyst Robert Halver with Baader Bank said: "Deutsche Bank can't pay $14 billion". Goldman Sachs agreed to reimburse $5.1 billion earlier this year over troubles with mortgage-backed securities that were sold to investors as high-quality debt.
The bank's USA -listed shares fell 8 per cent in after-hours trading.
Deutsche said the claim it was facing was in relation to its "issuance and underwriting of residential mortgage-backed securities" and related activities between 2005 and 2007.
Analysts at DZ Bank cut their valuation of Deutsche Bank by 10% and warned that the $14 billion figure on the table raises uncertainty about the overall costs of the bank's legal disputes and a potential capital increase needed to finance them. Like many of its peers, it has since faced a slew of lawsuits that often trace back to the boom years before the crash.
Bond prices were little changed.
Deutsche Bank to fight $14 billion demand from U.S. authorities was posted in Business of TheNews International - https://www.thenews.com.pk on September 18, 2016 and was last updated on September 18, 2016. Chief executive, John Cryan has a tough task ahead to steer the bank into profitability amid challenging conditions.