- Shares plunged late last week after word leaked the U.S. is seeking $14B over crisis-era MBS dealings, and they're extending those losses today as analysts crunch the bank's capital numbers.
- Any settlement above $6B would suggest a capital raise would be necessary just to pay the fine, says SocGen's Andrew Lim, noting Deutsche (NYSE:DB) has only about $12B in legal reserves and is still facing other probes.
- Macquarie's Piers Brown says the bank's capital position is "precariously thin" even without bad litigation outcomes, although a sale of Postbank could ease that pressure a bit.
- JPMorgan says a U.S. settlement in the $3B-$3.5B range would leave Deutsche will the necessary room to settle other cases without a capital raise. For each $1B over that range, litigation costs would erode capital by 24 basis points.
- Shares -0.8% premarket
- Down in concert with Deutsche on Friday on the $14B number was Royal Bank of Scotland (NYSE:RBS), which has also yet to settle U.S. mortgage charges. That stock has bounced 1.25% today.