The largest Bank of Germany will have to pay a billion fine, which can double its reserves stored in case of legal disputes.
As our newspaper recently suggested (Broken mirror “Deutsche Bank”, № 34), American Supervisory authorities are prepared to impose a fine of 14 billion dollars to the largest financial and credit institutions of the Federal Republic of Deutsche Bank. The German Bank, in turn, intends to drastically reduce the amount of the fine in the course of negotiations with the U.S. government – but the attitude of domestic bankers extremely vulnerable.
Giant requirements of the Ministry of justice of the USA associated with the issuance of mortgage loans. Years Deutsche Bank was handing out loans to purchase real estate American customers, whose solvency was below the permissible regulatory authorities level. The Bank linked the obligations of such clients in complex securities and insurance, which were sold to outside investors who had no idea what the value of their securities directly linked to the debt of insolvent homeowners. This long-standing practice in many ways led to the outbreak in 2008, the crisis in the American housing market and the bursting of “soap bubble” unsecured loans, followed by the biggest financial crisis in modern world history.
14 billion – this penalty is twice the reserves of Deutsche Bank, is designed to resolve all legal disputes that have to lead the German financial and credit Institute, and the Frankfurt bankers not less than one hundred per year. Shocking news from America immediately reflected in the share prices of Bank securities Deutsche Bank lost about eight percent of the cost.
The leadership of Deutsche Bank, mostly in English top management encourages investors and analysts to calm down: American Supervisory bodies often put forward huge financial requirements that are significantly reduced in the course of further negotiations. The German Bank plans to radically reduce the amount of the fine and is willing to conduct the trial in the case of the intractability of the American side. Deutsche Bank officially does not name the amount you are willing to pay a fine. The benchmark can serve as an example of the American financial and credit Institute at Goldman Sachs, who has transferred to the accounts of the Ministry of justice of the US $ 2.6 billion instead of the originally requested 15 billion.
However, the chances of Deutsche Bank also significantly reduce the total amount of any fine assessed as a much lower. There are several reasons. First, regarding the leadership of the German Bank with the American government in the last years are very bad: they have improved somewhat with the arrival of Briton John Cryan John Cryan to the post of Chairman of the Board, but in General, American authorities are still unhappy with the way the German Bank “atone for” their pre-crisis sins. Second, the us Supervisory authorities usually deal with foreign companies is much harder than with a local: there are a number of studies talking about the real discrimination of the large foreign business by the American authorities. Third, to complicate the negotiations with Deutsche Bank with them capable of the election campaign: the current democratic government on the eve of elections hardly will want to go to a substantial concessions in this high – profile case- because the candidate for the seat in the White house from the Democratic party Hillary Clinton (Hillary Clinton) and without that attribute too close a relationship with the financial world. Is in trouble himself and John Cryan: prolonged absence of a decision on the fundamental issue will only lead to further growth of uncertainty of the shareholders, than the leadership of Deutsche Bank is not the slightest interest.
In the end, analysts believe that the requirements of the American authorities would reduce in half the final amount of the fine will reach approximately seven billion dollars. She would hardly have exceeded five or five and a half billion, if not for the upcoming elections: in a situation of acute election campaign Deutsche Bank will have to undertake additional “political” strike. In any case, a huge fine is able to absorb almost all reserves of a leading German Bank, pledged to cover sanctions and judicial requirements, and to strengthen emerging since 2012, the trend of financial losses which Germany’s largest Bank consistently incurs due to numerous failures of the previous management.
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