Deutsche Bank has agreed a $7.2 billion fine over an investigation into mortgage-backed securities in the US.
The sum, which needs final approval, is far lower than the $14 billion the US authorities had asked the German bank to pay in September.
That fine had caused concerns that a failure of Deutsche Bank could pose a risk to the global financial system.
Credit Suisse also announced a similar deal, while Barclays is now under investigation too.
The sale of residential mortgage-backed securities played a significant role in the 2008 financial crisis.
Several banks in the US have been subject to investigations over allegations of giving mortgages to unqualified borrowers, then repackaging those loans as safe investments and selling the risk on to others. The inquiries related to deals done between 2005 and 2007.
Meanwhile, Credit Suisse has said it has agreed a $5.28 billion deal to settle its own dispute with US authorities over mortgage-backed securities.
Credit Suisse will pay US authorities $2.48 billion, and will also give consumers $2.8 billion in compensation over the next five years.
Deutsche Bank has been fined $258 million by the New York State Department of Financial Services and the Federal Reserve for working with Syria and Iran.
Employees who worked on the illegal transactions must not work with the bank again, the Federal Reserve said.
Deutsche Bank also violated various New York state laws and is paying the two agencies separately.
“The company did not have sufficient policies and procedures to ensure that activities conducted at its offices outside of the United States complied with US sanctions laws,” an official from the Federal Reserve said.
The Fed is requiring Deutsche Bank to create an “enhanced” program to “ensure global compliance” with US sanctions, characterizing its transactions with Syria and Iran “unsafe and unsound”.
Deutsche Bank said in a statement that the conduct had stopped several years ago, adding: “Since then we have terminated all business with parties from the countries involved.”
Two French banks, BNP Paribas and Credit Agricole, received higher fines from the US for working with US-sanctioned countries.
Germany’s biggest bank, Deutsche Bank, has announced a 15,000 job cuts after a €6 billion loss in Q3 of 2015.
The bank said it would cut 9,000 full-time jobs and 6,000 contractor roles.
Deutsche Bank is also planning to sell businesses employing 20,000 people over the next two years.
By 2018, “we expect to see the benefits of our hard work and potentially be in the midst of a powerful turn-around,” said John Cryan, co-chief executive.
The cuts represent just less than 15% of the firm’s total workforce.
Deutsche Bank’s shares fell 5.5% in Frankfurt trading on October 29.
The bank is trying to cut €3.8 billion of annual costs as European banks struggle with sluggish economic growth in their home markets and stricter regulation.
In times of low growth, reducing costs through job cuts is seen as a way to improve profits.
Deutsche Bank also plans to spin off Postbank with a stock market listing and sell its 20% stake in China’s Hua Xia Bank.
It has also said it will stop dividend payments for 2015 and 2016.
John Cryan told a news conference that the bank faced “hard decisions” as it was restructured.
“We must reduce Deutsche Bank’s complexity,” he added.
Deutsche Bank said it would close businesses in Malta, Argentina, Chile, Mexico, Finland, Peru, Uruguay, Denmark, Norway, and New Zealand. Some branches in Germany would close as well, John Cryan said.
The third-quarter loss was caused by more than €5.8 billion of charges in write downs and legal expenses at its investment bank and on assets it wants to sell, as well as higher litigation charges.
Of the 9,000 full-time job cuts, about 4,000 will take place in Germany.
Deutsche Bank employed 98,000 people as of the end of 2014, according to its annual report.
Twenty eight banks out of 31 have passed the Fed’s annual stress test in the US.
As part of the Comprehensive Capital Analysis and Review (CCAR), the Fed evaluates a bank’s capital adequacy and planned distributions, such as dividend payments and common stock repurchases.
Deutsche Bank and Banco Santander failed for “qualitative” reasons and Bank of America will need to resubmit their proposal.
US units of Deutsche Bank AG and Banco Santander SA have failed a US “stress test” designed to assess whether lenders can withstand another financial crisis.
The review, carried out by the Federal Reserve, gauges whether the biggest banks operating in the US have the “ability to lend to households and businesses even in times of stress”.
Another institution, Bank of America, has been asked to revise its financial plans due to “certain weaknesses”.
A further 28 banks passed the tests.
Officially known as the Comprehensive Capital Analysis and Review (CCAR), the tests were implemented in the aftermath of the 2008 financial crisis, in which some lenders needed bailouts from the Fed.
All banks with more than $50 billion in assets are subject to the annual examinations, which assess the corporations’ ability to deal with “doomsday” scenarios, such as rising unemployment and plummeting house prices.
In previous years, banks that failed the tests have been forced to suspend dividend payments to shareholders.
In a statement, Deutsche Bank said it had hired 1,800 employees “dedicated to ensuring that its systems and controls are best in class”.
Santander’s US chief executive, Scott Powell, said the bank still had “meaningful work to do to meet our regulator’s expectations and our own standards of excellence”.
However, Santander added that it had not been prevented from paying dividends.
Alibaba will meet with investors next week as it considers issuing its first US bond sale.
The Chinese e-commerce giant has hired Morgan Stanley, Citigroup, Deutsche Bank and JP Morgan to manage the sale.
Alibaba would offer dollar-denominated notes to institutional investors, the company said in a statement.
Alibaba considers issuing first US bond sale
Reports suggest that Alibaba would sell $8 billion in bonds after its record public listing just two months ago.
News of Alibaba’s bond sale comes after it made $9 billion in sales on Singles’ Day in China this week, which is considered the world’s biggest online sales day.
In September, the company’s initial public offering in New York was the biggest in the world, raising $25 billion and its stock is up nearly 70% since then.
Alibaba will hold meetings next week in Boston, New York, Hong Kong, London and Singapore.
Moody’s has given the proposed bond an A1 credit rating.
Deutsche Bank is planning to raise 8 billion euros ($11 billion) of capital.
The German bank has sold a stake worth 1.75 billion euros to an investment company controlled by a member of the Qatari royal family.
It will raise a further 6.3 billion euros through a rights offer to existing shareholders, the bank said.
Deutsche Bank is planning to raise $11 billion of capital
Authorities across Europe are demanding lenders hold more capital to absorb potential losses and make banks less likely to fail.
Deutsche Bank has been to shareholders twice before in recent years, raising 10.2 billion euros in 2010 and 3 billion euros in 2013.
Those increases in capital were not seen by investors as enough amid stiffer demands from regulators.
The 1.75 billion euro-stake was sold to Paramount Holdings Services, an investment vehicle owned by Sheikh Hamad Bin Jassim Bin Jabor Al-Thani of Qatar.
“These measures enable Deutsche Bank to position itself for long-term, sustainable success in a time of historic change in the global banking industry,” Deutsche Bank’s chief executives, Juergen Fitschen and Anshu Jain, said.
Last month, Anshu Jain said the bank “would not rule out any option” to strengthen its capital base.
Deutsche Bank said it would hire bankers in the US, invest 200 million euros in Germany and Europe, hire up to 100 advisers to help its biggest corporate clients and expand its wealth management team in some markets by 15% in the next three years.
Deutsche Bank reports a sharp fall in profits, in part due to weaker performance in investment banking during the eurozone debt crisis.
Net income for the first three months of the year was 1.4 billion Euros ($1.9 billion), down 35% on the 2.1 billion Euros the bank made a year earlier.
Revenue was down 12% at 9.2 billion Euros.
The bank said although the business environment was “more stable” than at the end of last year, it was “far less favorable” than a year earlier.
Deutsche Bank reports a sharp fall in profits, in part due to weaker performance in investment banking during the eurozone debt crisis
Germany’s biggest bank also took a 257 million Euro hit after writing off its holding in pharmaceutical company Actavis.
Revenues at the bank’s investment banking division fell 8% to 6.2 billion Euros, while those at the asset management arm dipped 17% to $3.4 billion.
Postbank, Deutsche’s retail arm, also reported lower revenues due to low interest rates and a move to reduce risk across its operations.
“This is a strong result which reflects good performance across most businesses, despite continued risk discipline and lower client activity than in the prior year,” the company said.
Investors, however, appeared to disagree, with Deutsche shares closing down 3.7% in Frankfurt.
The bank said it had focused on consolidating its position and building up its reserves.
“We continue to pursue our strategy of reducing legacy risks and strengthening our capital position, as evidenced by our disposal of Actavis,” said chief executive Josef Ackermann.
Europe’s top banks have been hit hard by the eurozone debt crisis, which has undermined investor confidence and hit trading volumes, which has knocked investment banks’ revenues and, therefore, profits.
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