Deutsche Bank disclosed Wednesday that it is currently in negotiations with the Department of Justice to resolve an investigation into the bank’s mortgage bond activities.
As Bloomberg reported, Deutsche Bank said in its earnings materials that the bank “has begun discussions with the U.S. Department of Justice concerning a potential settlement of claims that the DOJ may consider bringing based on its investigation of Deutsche Bank’s RMBS origination and securitization activities.”
The bank’s earnings materials don’t disclose what specific matter the DOJ is investigating, but the DOJ has been looking into Deutsche Bank’s mortgage-backed securities activities since at least 2013.
"Deutsche Bank, along with certain affiliates, have received subpoenas and requests for information from certain regulators and government entities, including members of the Residential Mortgage-Backed Securities Working Group of the U.S. Financial Fraud Enforcement Task Force, concerning its activities regarding the origination, purchase, securitization, sale and/or trading of mortgage loans, residential mortgage-backed securities, commercial mortgage-backed securities, collateralized debt obligations, other asset-backed securities and credit derivatives,” Deutsche Bank said in its earnings materials.
Deutsche Bank said that it is cooperating fully with those subpoenas and requests for information.
Deutsche Bank also stated that it entered into a “tolling agreement” with the DOJ in connection with various RMBS offerings to “toll the relevant statutes of limitations.”
Deutsche Bank noted that it has recorded “provisions” for some of the regulatory investigations but not others, but will not disclose those amounts.
“(Deutsche Bank) has not disclosed the amount of these provisions because it has concluded that such disclosure can be expected to prejudice seriously the outcome of these regulatory investigations,” the bank said.
Deutsche Bank also disclosed that it is currently a defendant in several lawsuits over its RMBS activities.
Those lawsuits include:
- Aozora Bank, which alleges $31 million in damages.
- The Federal Deposit Insurance Corporation as receiver for: Colonial Bank, alleging no less than $189 million in damages against all defendants; Guaranty Bank, alleging no less than $901 million in damages against all defendants; and Citizens National Bank and Strategic Capital Bank, alleging no less than $66 million in damages against all defendants.
- The Federal Home Loan Bank of San Francisco.
- Phoenix Light SF Limited, as purported assignee of claims of special purpose vehicles created and/or managed by former WestLB AG.
- Royal Park Investments, as purported assignee of claims of a special-purpose vehicle created to acquire certain assets of Fortis Bank.
