Deutsche Bank and Credit Suisse have agreed billions of pounds worth of payouts to the US Department of Justice, in relation to their role in the 2008 financial crisis.
Germany’s Deutsche Bank have agreed a $7.2 billion payment to US authorities, far lower than the $14 billion it was fined back in September. The fine, the largest ever given to a bank by the US government, sparked fears over the banks collapse if it proved unable to find the funds.
Claus Hulverscheidt, writing in Suddeutsche Zeitung, said the figure was a relief for the bank: “It could have been even worse for Deutsche Bank, but the punishment that has now been agreed with the US Department of Justice will put a heavy burden on the country’s biggest financial institution for years to come.”
Credit Suisse (NYSE:CS) has agreed to pay $5.3 billion for its part in the crisis. The banks were found to have mishandled mortgage-backed securities between 2005 and 2007, giving mortgages to unqualified borrowers and selling the risk onto other investors.
Barclays bank were also fined, but in an unprecedented move have refused to make any payment. The US government allege that Barclays “repeatedly misrepresented the characteristics of the loans backing securities they sold to investors throughout the world, who incurred billions of dollars in losses”.
The bank said in a statement: “Barclays rejects the claims made in the complaint. Barclays considers that the claims made in the complaint are disconnected from the facts. We have an obligation to our shareholders, customers, clients, and employees to defend ourselves against unreasonable allegations and demands. Barclays will vigorously defend the complaint and seek its dismissal at the earliest opportunity.”
Shares in Deutsche Bank (ETR:DBK) rose over 4 percent on the news, as investors breathed a sign of relief at the scale of the payment. After the $14 billion fine was issued, shares fell to 31-year lows. The bank is currently trading up 3.55 percent at 18.39 (0936GMT).