Investment Banking

Deutsche settlement could strain bank’s capital, lead to rights issue

A legal settlement half the size of the US Justice Department’s $14 billion opening bid in a high-stakes mortgage-securities case would exceed Deutsche Bank’s provisions for all legal matters and strain its already thin capital cushion.

Deutsche Bank's Frankfurt HQ
Deutsche Bank's Frankfurt HQ Photo: iStockPhoto

A legal settlement half the size of the US Justice Department’s $14 billion opening bid in a high-stakes mortgage-securities case would exceed Deutsche Bank’s provisions for all legal matters and strain its already thin capital cushion.

Even a $4 billion settlement "would put questions around capital position," JP Morgan analyst Kian Abouhossein said in a research note earlier this week.

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