Deutsche Bank (DB) is racing against time to renegotiate a $14 billion fine with the US Department of Justice (DOJ) for its misdealing during the sub-prime mortgage crisis. At the same time, Deutsche shares continue to flirt with record lows as the bank struggles to restore investor confidence.

The DOJ’s hefty penalty has dealt a swift blow to Germany’s oldest lender, undermining CEO John Cryan’s mandate of reducing costs and streamlining business. Since taking over the bank last year, Cryan has faced an uphill battle trying to convince investors that the bank is in sound financial standing. The fine also exposed a potential capital shortfall of up to €10 billion.

Deutsche confirmed last month that it was in talks with US regulators on lowering the amount it owed. It also made it clear that it had no intent to pay the full amount requested by US regulators.

“Deutsche Bank has no intent to settle these potential civil claims anywhere near the number cited. The negotiations are only just beginning. The bank expects that they will lead to an outcome similar to those of peer banks which have settled at materially lower amounts,” the company said on its website in a September 14 press release.[1]

More than four weeks later, a deal remains elusive. In fact, we may be no closer to a deal than we were this time last month. According to an anonymous source close to the negotiations, the bank is doing “everything possible” to cut costs in order to soften the impact of the DOJ fine.[2]

The bank maintains it has no solvency or liquidity issues and that it plans to increase capital to meet all its regulatory requirements. But several analysts have noted that Deutsche has just €5.5 billion set aside for settling litigation. If that’s the case, Deutsche will likely accelerate job cuts to raise enough cash to cover its expenses. Obviously, the more jobs that Deutsche Bank cuts, the weaker its position will appear in the eyes of investors.[3]

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