Deutsche Bank not to pay US $14bn claim

Germany’s largest lender Deutsche Bank says it will challenge a $14 billion claim by the US Department of Justice to settle an investigation into its sale of mortgage-backed securities.

“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,” Deutsche Bank said in a statement on Friday.

No details about the case have been publicized. Yet, reports say the sales of mortgage securities before the 2008 financial crisis lie at the heart of the case.

The claim against Deutsche Bank far exceeds its expectations that the DoJ would be looking for a figure of only up to 3 billion euros ($3.4 billion), Reuters reported.

European stocks wrapped up in negative territory Friday in reaction to the case against Deutsche Bank.Royal Bank of Scotland and Barclays both fell over 5%, while Credit Suisse and UBS fell over 3%. French lenders BNP Paripas and Societe Generale both fell over 2%.

Deutsche Bank’s shares stumbled 8.5%, wiping off roughly €1.5 billion from the German lenders’ market capitalization.

Other big banks have reached deals in recent years with US authorities over their mortgage activities in the run-up to the financial crisis. Earlier this year, Goldman Sachs agreed to pay $5.1 billion to put to rest claims over its dealings.