The bank's CEO John Cryan said yesterday that the lender expected a serious negative impact on its fourth quarter results due to a costly settlement with the DOJ.
The largest German lender has officially finalized the negotiations with the U.S. Department of Justice over mis-selling of toxic mortgage-backed securities prior to the 2008 financial crisis, reported Bloomberg. As it was previously announced, the bank agreed to pay a fine of $7.2 billion to the DOJ that consists of $3.1 billion of direct civil monetary penalty and $4.1 billion of consumer relief penalty, with the latter one to be paid out in the course of the next five years.
As the final agreement was reached yesterday, the bank's CEO John Cryan apologized on behalf of Deutsche Bank (NYSE: Deutsche Bank [DB]):
"Our conduct in this matter, which occurred from 2005 to 2007, falls short of our standards and is unacceptable. We apologize unreservedly for it. We have subsequently exited many of the underlying activities and comprehensively improved our standards. As we enter 2017, we are pleased to have resolved this matter" Cryan said in a statement, reported Reuters.
However, Cryan mentioned that the amount of the settlement, which is still much lower than the $14 billion fine initially put forward by the DOJ, will have a negative impact on the lender's performance in Q4. According to Reuters, the losses of the fourth-quarter pre-tax profits are expected to reach $1.2 billion due to the heavy civil monetary penalty imposed by the Department of Justice on the bank that needs to be paid out in the nearest future.
Apart from that, the bank is still involved in a number of investigations such as the ones that involve Deutsche Bank's Moscow branch that was accused of illegally transferring funds out of Russia through the bank's infrastructure, leading to a management crisis in the bank in 2015.
"Given other lawsuits, it is still too early to talk of having drawn a line under all matters. We are, however, nearing our objective of being able to concentrate primarily on the future instead of repeatedly having to look over our shoulders at past events," said Cryan, as reported by Business Insider, Reuters.