16 September 2016•Update: 17 September 2016
NEW YORK
Shares of Deutsche Bank plummeted nearly 10 percent Friday after the company said it was not willing to settle in the amount of $14 billion in claims with the U.S. Justice Department.
The bank’s stock price fell to as low as $13.33 per share after closing at $14.76 a share Thursday.
The company confirmed that it has begun negotiations with the Justice Department, according to a statement released late Thursday from Deutsche Bank’s headquarters in Frankfurt, Germany.
Those talks are attempting to settle civil claims that involves Deutsche Bank's activities in residential mortgage-backed securities (RMBS) between 2005 and 2007.
"Deutsche Bank has no intent to settle these potential civil claims anywhere near the number cited,” according to the statement that did not specify the number of claims. “The bank expects that they will lead to an outcome similar to those of peer banks which have settled at materially lower amounts.”
The bank noted that the negotiations with Justice Department have just begun, and the U.S. agency has invited the company to submit a counter proposal as a next step.
The settlement amount is expected to be less than three times the $14 billion sought by the U.S. government, according to analysts.
Many major banks in the U.S. have paid billions in settlements for allegedly misleading investors by selling home loans as safe RMBS that helped to create a housing bubble that lead to the financial crisis of 2007 - 2008.
Financial institutions, including JP Morgan Chase, Morgan Stanley, and Citigroup have paid $23 billion in penalties to settle similar claims.
Bank of America paid the highest penalty when it doled out $16.6 billion in 2014 to settle its claim.
