Under the terms of the agreement, the bank will pay a civil monetary penalty of $3.1bn and to provide $4.1bn in consumer relief in the US.
Deutsche Bank said: “The consumer relief is expected to be primarily in the form of loan modifications and other assistance to homeowners and borrowers, and other similar initiatives to be determined, and delivered over a period of at least five years.”
However, the settlement is subject to the negotiation of definitive documentation.
The bank said that there is no guarantee that the Department and the bank will agree on the final documentation.
As a result of the settlement, Deutsche Bank expects to post pre-tax charges of nearly $1.17bn for the fourth quarter earnings.
In September, the lender said that it had started negotiations with the Justice Department to resolve the claims the bank’s issuance and underwriting of residential mortgage-backed securities (RMBS) between 2005 and 2007.
It confirmed that it had been asked to $14bn to settle the probes.
At that time, the bank said that it “has no intent to settle these potential civil claims anywhere near the number cited.”
Swiss banking major Credit Suisse has also reached with the US authorities to pay $2.48bn to settle claims related to its residential mortgage-backed securities (RMBS) business that was conducted through 2007.
Credit Suisse said: “This settlement would release Credit Suisse from potential civil claims by the DOJ related to its securitization, underwriting and issuance of RMBS. “
Image: Deutsche Bank headquarter in Frankfurt am Main, Germany. Photo: courtesy of Raimond Spekking / Wikimedia Commons.
