Deutsche Bank fails to talk down US Department of Justice

No joy for chief executive John Cryan in Washington...

Deutsche Bank fails to talk down US Department of Justice

Deutsche Bank CEO John Cryan. Picture by Michael Probst AP/Press Association Images

Deutsche Bank has failed to secure a deal with the US Department of Justice (DoJ) over its mis-selling of mortgage-backed securities.

Shares in Europe's largest bank fell more than 3% in early Monday trading, making it the biggest faller on Germany's main stock market, after Deutsche chief executive John Cryan's visit to Washington did not bring about a quick resolution over the weekend.

Cryan was in attendance at the International Monetary Fund (IMF) and World Bank's autumn meetings, as markets hoped he could personally negotiate down the $14 billion (€12.52bn) fine with which Deutsche has been hit.

By 0950GMT, shares had recovered somewhat to €11.74. They have fallen about 48% in 2016 thus far.

Terry Torrison, MD of McLaren Securities, told Reuters:

"They had a bit of a bounce up last week, but I would still steer clear of Deutsche Bank. They were never going to sort out the US issues that quickly, and whatever happens, I still think they will need to have a rights issue."

The bank is now aiming to raise €5bn in capital to reinforce its balance sheet. With risky assets and thousands of jobs being cut, Cryan has called it a peak restructuring year.

Deutsche set aside €5.5bn ($6.2bn) for litigation at the end of June and is ultimately hoping to secure a settlement of between $3bn – $5bn.