Deutsche Bank signs $7.2 billion deal with U.S. over risky mortgages
By Karen Freifeld
NEW YORK (Reuters) - Deutsche Bank (DBKGn.DE: Quote) (DB.N: Quote) finalized a $7.2 billion settlement with the U.S. Department of Justice over its sale of toxic mortgage securities in the run-up to the 2008 financial crisis, the government agency said on Tuesday.
Deutsche's agreement represents the largest resolution for the conduct of a single entity in misleading investors in residential mortgage-backed securities, the department said in a statement. The settlement was higher than the $7 billion paid by Citigroup to federal and state authorities in 2014.
"Deutsche Bank did not merely mislead investors: it contributed directly to an international financial crisis," Attorney General Loretta Lynch said in the statement.
John Cryan, Deutsche's chief executive, said that the bank's conduct between 2005 and 2007 fell short of standards and was "unacceptable." He said the bank had exited many of the underlying activities and improved standards.
Deutsche Bank ADR-listed shares closed down 3.2 percent to $18.56 on the New York Stock Exchange.
The Frankfurt-based bank announced it had reached the agreement in principle with U.S. authorities on Dec. 23.
Its stock price hit a record low in September after the bank acknowledged the Justice Department made an opening demand of $14 billion.
The Justice Department reached $46 billion in settlements with U.S. banks over the shoddy securities that contributed to the U.S. housing market collapse and financial crisis before turning to Deutsche and other European banks. Continued...