The storm for Deutsche Bank AG in regard to its looming settlement with the U.S. Justice Department is still not over. But as the German bank awaits a final judgment, it posted an unexpected quarterly profit, benefiting from a modest rebound in bond trading, according to a Reuters article by Arno Schuetze and Anjuli Davies.
However, the article noted that the news “failed to dispel the cloud of uncertainty that drove clients to withdraw billions of euros.”
From the article:
Deutsche Bank Chief John Cryan said on a conference call that the quarter had been overshadowed by talks over the U.S. Department of Justice’s settlement proposal relating to sales of RMBS (residential mortgage-backed securities) which had caused uncertainty.
Cryan warned Deutsche Bank employees in a letter that the situation "will stay difficult for a while" and said he was working to finalize the settlement "as soon as possible".
Despite weeks of negative headlines, Deutsche was able to announce an unexpected net profit of 278 million euros ($303 million) in the third quarter, lifted by a surge in bond trading that boosted all Wall Street banks.
Rumors swirled after reports came out in September that stated Deutsche Bank AG was nearing a settlement deal with U.S. authorities. This news also hinged on rumors, coming from a German Magazine that chose not to reveal its source.
The DOJ proposed a $14 billion settlement. Shortly thereafter, Deutsche Bank shot back and said it “has no intent to settle these potential civil claims anywhere near the number cited.”
One rumor went far enough to suggest that Germany is preparing a bail-out of Deutsche Bank "in case it cannot pay fines in the US." However, the German government is denying the plan exists.
This most recent Reuters article noted that “Deutsche Bank has so far not made a specific proposal for what it would be willing to pay to settle the RMBS case and has therefore not upped its provisions for it. It had hoped to settle the case for about $3 billion.”
