Claim will 'lower,' says Deutsche Bank

Deutsche Bank's share price dipped seven percent in post-bourse trading early Friday after Germany's once prime bank disclosed what it said was only an opening sum in its legal battle with the US government.

"The negotiations are only just the beginning. The bank expects that they will lead to an outcome similar to those of peer banks which have settled at materially lower amounts," said the Frankfurt-based operator in a message issued in New York.

Its message late Thursday, New York time, following a corresponding report by the "Wall Street Journal," said the dispute involved "potential civil claims" linked to mortgage bonds sold by Deutsche Bank between 2005 and 2007.

The US Justice Department declined comment late Thursday.

Investors 'misled'

In April, the US investment bank Goldmann Sachs agreed to pay more than $5 billion to settle similar allegations.

US authorities have accused major banks of misleading investors about the values and quality of complex mortgage-backed securities sold before 2008. Many bond purchasers subsequently began lawsuits in attempts to recover losses.

In June, Deutsche Bank said it had set aside $5.5 billion to resolve pending legal matters.

Bank had better times

In April last year, Deutsche Bank paid $2.5 billion to settle American and British charges that it had manipulated the London Interbank Offered Rate, or Libor, affecting commercial interest rates.

Second-quarter earnings posted by Deutsche Bank in June showed net earnings of only $22 million, amounting to a 98 percent year-on-year drop in profits.

Chief Executive John Cryan plans to cut 9,000 jobs worldwide by 2020. The bank's share price has fallen to around 10 percent of its pre-2008-crisis value.

ipj/kl (dpa, AFP, Reuters)