AFP, Frankfurt :
Deutsche Bank and Credit Suisse said Friday they had agreed with US authorities to pay billions of dollars to settle probes into the sales of toxic mortgage bonds that contributed to the 2008 financial crisis.
The German lender will pay a total of $7.2 billion-a $3.1-billion fine and $4.1 billion in relief to consumers-as part of the long-sought agreement in principle with US authorities, it said.
Shares in the German banking giant rose on the Frankfurt stock exchange on the heels of the announcement, which analysts said was a good outcome for now.
“With this settlement, CEO John Cryan has given himself and Deutsche Bank a Christmas present,” said LBBW bank’s Ingo Frommen.
In September, the US Department of Justice had sought an unaffordable $14-billion fine from Deutsche, sparking fears the bank could collapse and destabilise the global financial system.
Hours after the deal was announced on Friday, Credit Suisse said it too had struck an agreement with US authorities to pay almost $5.3 billion to settle a similar dispute over subprime mortgage bonds.
A day earlier, the DoJ revealed it was suing British financial giant Barclays, accusing the bank of massive fraud in the sale of mortgage-backed securities in the US.
The rash of announcements comes as President Barack Obama’s outgoing administration is racing to finish investigations into the Wall Street firms that created and sold the risky mortgage bonds that led to the worst crisis since the Great Depression.
US authorities have already taken more than $46 billion in fines from other big banks for their roles in the financial meltdown, according to Bloomberg News.
Deutsche Bank and Credit Suisse said Friday they had agreed with US authorities to pay billions of dollars to settle probes into the sales of toxic mortgage bonds that contributed to the 2008 financial crisis.
The German lender will pay a total of $7.2 billion-a $3.1-billion fine and $4.1 billion in relief to consumers-as part of the long-sought agreement in principle with US authorities, it said.
Shares in the German banking giant rose on the Frankfurt stock exchange on the heels of the announcement, which analysts said was a good outcome for now.
“With this settlement, CEO John Cryan has given himself and Deutsche Bank a Christmas present,” said LBBW bank’s Ingo Frommen.
In September, the US Department of Justice had sought an unaffordable $14-billion fine from Deutsche, sparking fears the bank could collapse and destabilise the global financial system.
Hours after the deal was announced on Friday, Credit Suisse said it too had struck an agreement with US authorities to pay almost $5.3 billion to settle a similar dispute over subprime mortgage bonds.
A day earlier, the DoJ revealed it was suing British financial giant Barclays, accusing the bank of massive fraud in the sale of mortgage-backed securities in the US.
The rash of announcements comes as President Barack Obama’s outgoing administration is racing to finish investigations into the Wall Street firms that created and sold the risky mortgage bonds that led to the worst crisis since the Great Depression.
US authorities have already taken more than $46 billion in fines from other big banks for their roles in the financial meltdown, according to Bloomberg News.
