Deutsche Bank shares bounce back from securities scandal

Stock rises for fourth straight day, paring losses this year to about 41 per cent

Deutsche Bank stock rose 1.5 per cent to €13.22 in Frankfurt. Photograph: iStock

Deutsche Bank stock rose 1.5 per cent to €13.22 in Frankfurt. Photograph: iStock

 

Deutsche Bank shares have recovered from the sell-off sparked by the US department of justice demand for $14 billion to settle a probe tied to its mortgage-backed securities business.

The stock rose for a fourth straight day, increasing 1.5 per cent to €13.22 by 9:22am in Frankfurt, paring losses this year to about 41 per cent.

Deutsche Bank closed at €13.10 on September 15th, hours before the lender disclosed that the justice department’s opening position in settlement negotiations tied to residential mortgage-backed securities.

Legal costs

Chief executive John Cryan has been under pressure to restore investor confidence, with a slump in shares compounded by concerns over Deutsche Bank’s ability to absorb mounting legal costs.

While the chief executive has said he doesn’t plan to raise capital and expects US authorities to scale back their initial request, the shares reached a record low last month.

The company’s €1.75 billion ($1.9 billion) of undated 6 per cent CoCo bonds were at 78.7 cents on the euro, down from 82.8 cents on September 15th, and now yield 11.4 per cent to their call date in April 2022, data compiled by Bloomberg show.

Deutsche Bank, which runs Europe’s largest securities firm, is scheduled to report third-quarter earnings on October 27th. – (Bloomberg)