Deutsche Bank Settles With DOJ: Will Pay $3.1 Billion Civil Penalty

Tyler Durden's picture

With analyst expectations/hopes in the $2 to $5 billion range (against the initial $14 billion fine), Deutsche Bank said it has reached settlement with US authorities to pay a $3.1 billion civil penalty (and provide $4.1bn in relieef to consumers). Removing considerable uncertainty about Deutsche's capital position, one wonders how much this remarkably low-ball settlement had to do with Donald Trump's current loan re-negotiations with the "world's most systemically dangerous bank."

As a reminder, the Wall Street Journal noted that DB's attorneys had privately suggested that a $2 - $3 billion settlement with the DOJ was probably in the ballpark.  Meanwhile, wall street analysts had estimated settlements in the $2-$5 billion range.  Any fines paid pursuant to current negotiations would be in addition to the $1.9 billion already paid in 2013 to settle other U.S. claims related to mortgage-backed securities.

Per the table below, as of June 30, DB had reserved a total of €5.5 billion for civil litigation and regulatory penalties on it's balance sheet.


And so this lower than expected penalty has sent US equity futures higher...

As Bloomberg reports, Deutsche Bank said it has reached a $7.2 billion agreement to resolve a years-long U.S. investigation into its dealings in mortgage-backed securities, removing a major legal hurdle for the bank.

Deutsche Bank will pay a $3.1 billion civil penalty and provide $4.1 billion in relief to consumers under a settlement in principle with U.S. authorities, which was announced by the Frankfurt-based bank in a statement early Friday. The deal compares with the Justice Department’s opening request of $14 billion, which the firm has said it expected to whittle down.


While the agreement removes significant uncertainty hanging over Deutsche Bank, Germany’s biggest lender remains under Justice Department investigation in several other matters and also faces potentially expensive civil suits. Chief Executive Officer John Cryan has made resolving major litigation a priority as he seeks to restore confidence in the Frankfurt-based lender.


The Obama administration is pressing to wrap up investigations of Wall Street firms for creating and selling the subprime mortgage bonds that fueled the 2008 financial crisis. Authorities have already extracted more than $46 billion in fines from six U.S. financial institutions over their dealings in mortgage-backed securities. Bank of America Corp., which had the largest such settlement, agreed to pay $16.7 billion over bonds that were worth four times what Deutsche Bank’s bonds were worth.

While Obama's legacy played its part, no doubt; we just can't help but wonder how much the fact that, as Bloomberg reports, the bank is trying to restructure some of Trump’s roughly $300 million debt as part of an attempt to reduce any conflict of interest between the loan and his presidency, according to a person familiar with the matter.

Normally, the removal of a personal pledge might lead to more-stringent terms. But there is little normal about this interaction. Trump’s attorney general will inherit an investigation of Deutsche Bank related to stock trades for rich clients in Russia -- where Trump says he plans to improve relations -- and may have to deal with a possible multibillion-dollar penalty to the bank related to mortgage-bond investigations.


Whatever terms a restructured loan might include, they will reflect the complex new relationship spawned between Germany’s largest bank and its highest-profile client. Ethicists say this concerns them.


“When you have political appointees making decisions about banks that the president owes a lot of money to, it looks terrible,” said Richard Painter, a law professor at the University of Minnesota who was the chief ethics lawyer for President George W. Bush. “The U.S. government is dealing with regulatory and criminal issues with the big banks all the time, and if he owes them a lot of money, there might be an incentive to favor less regulation and less enforcement for the banks.”


Deutsche Bank declined to comment.

Even better news, Deutsche Bank expects to record a pretax charge of about $1.17b in 4Q.

So between Obama's legacy and Trump's loan mods, the department of Justice settled for 22c on the dollar of their original demand? That is around 10% of 2016's revenues... "cost of doing business"?

Where did the number come from? That's easy...

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boattrash's picture

Our checks are in the mail...

hedgeless_horseman's picture

The department of Justice settled for 22c on the dollar of their original demand...

...and Loretta Lynch announces her new position with DB in the compliance department in 5...4...3...

JackT's picture

Since DB gets to agree on the fine. Do they get to choose the currency as well? I bet I can guess the one they would pick.

Save_America1st's picture

3.1 Billion?  meh....DB should be able to make that back easy enough by shorting and manipulating the fake paper precious metals markets....oh wait...

1980XLS's picture

No jailtime?


Free Jon Corzine!

boattrash's picture

Until the US Judicial system (DOJ) addresses the issue of Restitution X 3, (to the victims/citizens). I would prefer to see NO fines collected, as it only allows for growing said system to fuck us a little bit deeper...

BabaLooey's picture




Seasmoke's picture

That should get us to 20,000. Just before Christmas. Just in the St.Nick of time. 

AC_Doctor's picture

Whose the King Kunt that says the fucking thieves can get a 78% discount?  The little guy gets a fuck and no reach around again and again...

Yen Cross's picture

   Is the $4.1 B in "customer relief", going to be paid Wells Fargo style?

Nobodys Home's picture

lol ...and who will the check for 3.1 B be made out to?

Paul Morphy's picture

Malfeasance wins the day.



jamesmmu's picture

The total would be 7.1 billion. Not too bad.

SgtShaftoe's picture

Wake me up when ONE single banker is held responsible for their crimes.  Some will be held responsible eventually, by hook or by crook.  I would guess the sentence will arrive at approx. 2000 fps before formal charges ever arrive.  I am almost sure that's how things are going to play out when "justice" is truly exposed to the population for the injustice that it is. 

boattrash's picture

Thank our SCOTUS! Corporations are People!

SgtShaftoe's picture

Yes, and fuck them all with pineapples attached to weed eaters, full throttle, go deep.  Put mittensworth romney in the line as well.  He defended that decision.

Nobodys Home's picture

...and they're a minority too!

Nobodys Home's picture

The 10-20 fps of a guillotine would be more of a public spectacle!

SgtShaftoe's picture

true, but maybe we could implement some one pound tanne rite packages to bring out the flair from the final shots. 

Nobodys Home's picture

(edit: After 8 years) the Obama DOJ slapped this suit on DB... AFTER Trump became the Republican presidential candidate...ending less than a month before Big ears is out. Nothing fishy here eh?
Hmm may be some presidential conflict of interest here! We told you he was corrupt and you shouldn't have voted for him.....Impeach! /s

bidaskspread's picture

I wonder if pension fund holders think this is justice?

jackinrichmond's picture

put them in jail !

this fine is nothing more than 'a cost of doing business'..  paid for (either directly or indirectly) by shareholders.

Txpl9421's picture

I guess they won't go out of business tomorrow. But there is always next week.

loveyajimbo's picture

Will they also "disappear" all those derivatives linked to Monti Paschi and other zombie Italian banks?

And the thought that Lardass Loretta would do any favors for DB to help out Trump's loan restructuring... is laughable on it's face. Sounds like something the bonesmoking douchebag Lindsey Graham would say...

pcrs's picture

I think DOJ wants to grab some money before DB is broke.

wisebastard's picture

lets face it......this is open bribery

naro's picture

Obama wants to close the deal quickly so that the settlement can be quickly distributed to his friends and organizations that he favors.

tigercpa's picture

Yep.  All of these bank "settlements" are design to funnnel funds to radical leftist groups like ACORN, La Raza and various and sundry "aggrieved" parties.  Settlements are not subject to Congressional oversight, and the DOJ admits it has no "guidelines" on how the money is spent, nor to whom it goes.

Obama has to hurry and get this done and spread to key constituents in Detroit, Chicago, Oakland for "debt forgiveness"


turnball the banker's picture
turnball the banker (not verified) Dec 22, 2016 11:21 PM

How many people went to jail?

turnball the banker's picture
turnball the banker (not verified) turnball the banker Dec 22, 2016 11:41 PM

Fuck me Horshack i know this one,the same amount of wells fargo creeps,ironic hey ,something endemic here

gregga777's picture

The banks are the primary conduit of bribes to the political parasites. That's why the banking gangsters break the law with impunity and get away with their crimes.

Every citizen who ever sits on a jury should seriously consider jury nullification in protest over the egregious criminality of the banking gangsters, Con Street Swindlers, criminal crony capitalist conporations and the political parasites. Just insist on non-guilty verdicts, unless it's the very rare trial of one of the privileged and protected classes. In that case nail them to the wall.

There is no truth and justice in the United States.

eeaton's picture

I don't believe one banker has even be indicted much less serve jail time thanks to Holder

hrhong's picture

again a rigged system. billions of fines, banks are being rescued with tax money and the markets are up. 

MrBoompi's picture

I'd say in the whole scheme of things, considering the banking sector and their associates cost the economy $15+ trillon, the fines that have been handed out are miniscule in comparison.  I think they should feel lucky, especially when you consider nobody received any jail time.