NEW YORK, Oct. 1 (UPI) — Stock for the German Deutsche Bank AG ended a roller-coaster week by rebounding amid talk it may require a taxpayer bailout as it negotiates a potential $14 billion penalty being sought by the U.S. Justice Department for the bank’s role in the 2008 financial crisis.
Deutsche Bank leaders denied reports of a potential cash shortage as its legal bills mount in the United States and elsewhere, though several top U.S. hedge funds reduced their cash holdings with Deutsche Bank as politicians began openly debating a possible bailout that would have been unthinkable even two months ago.
The appetite for any such bailout is nil in Germany, a nation that has staked out tough positions with fellow members of the European Union that have faced debt crises, including Greece and Spain. The Wall Street Journal cited opinion surveys in Germany that showed three in four voters said they would not support a taxpayer bailout for Deutsche Bank, which has come under criticism for lucrative executive salaries, questionable management decisions and mounting legal problems in the United States and elsewhere.
Bloomberg reported Saturday the bank and six former employees were indicted in Italy after allegedly helping execute transactions with the Italian bank Banca Monte dei Paschi di Siena SpA. Those indicted included top aides to former co-CEO Anshu Jain. The former Deutsche Bank employees are charged with executing derivatives to help hide losses at Monte Paschi, the world’s oldest bank, which was later forced to restate its cash holdings and twice tap shareholders for cash infusions to avoid potential collapse.
In the United States, officials at the Justice Department are said to be pursuing a $14 billion fine for Deutsche Bank for its role in the 2008 financial crisis by passing off worthless investments in the housing market.
Company executives called the $14 billion figure an opening offer from regulators and expressed confidence the bank would wind up paying a much smaller fine.
Deutsche Bank’s stock fell by 49 percent to record lows in August when the potential Justice Department fine was first reported.
The stock swung wildly throughout the week as rumors of a cash shortfall simmered, leading to bailout speculation. The stock rebounded Friday by more than 14 percent to close at $13.02 on the New York Stock Exchange.
