Deutsche Bank shares saw renewed selling in stock markets on Monday after a report seemed to rule out any state-aid for the embattled German lender. Heavy selling pushed the share price down more than 6.6% to €10.65 by about 1pm GMT (last Monday), making it the DAX 30’s worst performer by far. At one point the share price hit a historic low of €10.63.
Focus, a German weekly news magazine published in Munich, reported on Friday that Chancellor Angela Merkel had categorically ruled out stepping in to help Deutsche Bank with its U.S. legal troubles in 2017, citing unidentified government officials. The article states that Merkel made her views clear in discussions with Deutsche Bank CEO John Cryan.
Chancellor Angela Merkel has ruled out any state assistance for Deutsche Bank AG in the year heading into the national election in September 2017, Focus magazine reported, citing unidentified government officials.
The German leader also declined to step into the Frankfurt-based bank’s legal imbroglio with the U.S. Justice Department, which may seek as much as $14 billion in sanctions against Deutsche Bank’s mortgage-backed securities business, the magazine said. A German government spokesman declined to comment on the report Saturday. A Deutsche Bank spokeswoman also wouldn’t comment.
“At no point of time (CEO) John Cryan has asked the chancellor for support in the negotiations with the Department of Justice and he doesn’t intend to do that. He is very strong on that position,” he said.
The company has previously said that a settlement between $2 billion and $3 billion would be fair, as it had already paid $1.9 billion in 2013 to resolve similar claims, the Wall Street Journal reported earlier this month. Initial concerns over Deutsche Bank surfaced earlier in the year with investors detailing concerns over its exposure to the energy sector and a possible cash crunch.
The finances of Germany’s biggest lender, which has lost almost half of its market value this year, are raising concern among German politicians. At a closed session of Social Democratic finance lawmakers this week, Deutsche Bank’s woes came up alongside a debate over Basel financial rules, according to two people familiar with the matter.
Germany’s government expects a “fair outcome” in the U.S. probe, the Finance Ministry said on Sept. 16.
Deutsche Bank has said it’s unwilling to pay the maximum amount sought by U.S. authorities as investors fret about the bank’s capital. Chief Executive Officer John Cryan, 55, has struggled to boost profitability by selling riskier assets and eliminating jobs as unresolved legal probes and claims add to concerns that the lender will be forced to raise capital.