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The Guardian - UK
The Guardian - UK
Business
Graeme Wearden (until 2.30) and Nick Fletcher

German government denies working on Deutsche Bank rescue plan – as it happened

Will Angela Merkel’s government have to step in to help Germany’s biggest lender?
Angela Merkel at a cabinet meeting today. Will her government step in to help Germany’s biggest lender? Photograph: Action Press/REX/Shutterstock

European markets move higher

Hopes that Deutsche Bank can solve its current problems, along with a rise in oil prices, helped push European shares into positive territory. The final scores showed:

  • The FTSE 100 finished up 41.71 points or 0.61% at 6849.38
  • Germany’s Dax rose 0.74% to 10,438.34
  • France’s Cac closed 0.77% higher at 4432.45
  • Italy’s FTSE MIB was 0.54% better at 16,222.21
  • Spain’s Ibex ended up 0.6% at 8740.4
  • In Greece, the Athens market added 0.13% to 563.15

On Wall Street, the Dow Jones Industrial Average is currently down 29 points or 0.17%.

Deutsche Bank ended the day up 2% at €10.765.

Meanwhile in the oil market, Brent crude is 2.65% better at $47.19 on optimism that oil producers in Algeria will lay the foundations for a deal to curb production at November’s Opec meeting.

On that note, it’s time to close for the evening. Thanks for all your comments, and we’ll be back tomorrow.

Here are the quotes from Christine Lagarde’s comments on Deutsche Bank in her CNBC interview with Sara Eisen.

Eisen: There are renewed concerns about the health of Europe’s banking sector. Deutsche Bank is trading at a record low level. There’s real worry about whether it has enough capital. Have you spoken to Chancellor Merkel about Deutsche Bank and the needs of the German banking sector?

Lagarde: Well, we completed back in June, actually, a financial sector assessment of the German banking system. And it is a system that is critically important with some systemic players. Deutsche Bank is certainly one of them. So I think we all have a stake in making sure that this situation is addressed, that the right measures are taken, that we don’t fall into over dramatisation either. But I trust that these measures will be taken.

Eisen: Do you trust that the German government would step in if capital is necessary?

Lagarde: You know, this is something that they’re going to debate amongst themselves. I don’t see...

Eisen: Would you recommend it?

Lagarde: I don’t see that particular institution as - at a stage where state intervention is absolutely called for at the moment. And I would hope that the right measure are taken internally so that the whole financial sector in Germany is solid and that systemic players [are] strengthened. It has recovered a bit today, by the way.

Eisen: Yes, it has. But do you see it as a global systemic risk?

Lagarde: Deutsche Bank is a systemic player. Let’s face it. Because it has a lot of relationship with many other banks around the world. And it is an international player as well. So it’s important that it be consolidated and, you know, it has a solid base. Let’s also be realistic. But it needs measures.

Christine Lagarde, the managing director of the International Monetary Fund, has said she does not believe Deutsche Bank needs state aid at the moment, in comments to CNBC:

And here’s a suggestion of a unexpected rescuer for Deutsche Bank:

Bloomberg reports:

Yigit Bulut, a chief adviser to Turkish President Recep Tayyip Erdogan, said the country must consider using a new wealth fund or a group of state-owned banks to buy the Frankfurt-based company. Bulut made the proposal on Tuesday via his Twitter account, saying Germany’s largest lender should be made into a Turkish bank.

The stock of Europe’s biggest investment bank has slumped by more than 50 percent over the past year, falling to a record low on Tuesday, over concerns about its weakening financial position and penalties in the U.S. tied to mortgage-backed securities. Bulut’s comments come after Moody’s Investors Service on Sept. 23 cut Turkey to junk, citing slowing economic growth and deteriorating credit fundamentals.

“For months on TV programs, I’ve been calling on Turkey’s private and public capital: ‘Some very good companies in the EU are going to fall into trouble and we need to be ready to buy a controlling stake in them,’” Bulut wrote on Twitter. “Wouldn’t you be happy to make Germany’s biggest bank into Turkish Bank!!”

And back with Federal Reserve chair Janet Yellen:

Asked about whether the German government should rescue Deutsche Bank he said he does not comment on individual banks. But:

More from ECB president Mario Draghi who is speaking after his appearance at the German parliament.He paints a rosy picture of his session before the MPs:

(ZIRP is the zero interest rate policy instigated by central banks such as the ECB)

And one German response:

Updated

Oil prices slip back after US data

A bigger than expected rise in US weekly gasoline stocks has offset a surprise fall in crude stocks to take the shine off oil prices.

Gasoline stocks rose by 2m barrels, compared to expectations of a 178,000 increase. Crude stocks however fell by 1.9m barrel rather than the 3m barrel rise forecast by analysts.

Oil prices have been volatile in recent days as key producers meet in Algeria, with hopes that the outline of a deal on reducing output could be agreed for the next Opec meeting in November.

After early gains on hopes of a deal, crude prices have come off their best levels on the US data. Brent crude is currently up just 0.2% at $46.06 a barrel having climbed as high at $47.19, while West Texas Intermediate is 0.13% lower at $44.61.

Although the congressional session is mostly focused on regulation, Yellen did comment on interest rates. She said there was no fixed timetable for raising rates, but most Fed members believed it was appropriate to move if the economy remained on track.

So December then?

US Federal Reserve chair Janet Yellen’s comments on supervision and regulation of financial institutions, being delivered to a congressional committee, can be read here.

She said the Fed had implemented standards designed to limit the financial stability risks posed by the largest banks, in the wake of the global financial crisis. But she said they must endure small and medium sized banks did not face undue regulatory burdens. And she adds:

Looking forward, we must continue to monitor for the emergence of new risks, since another key lesson from the crisis is that financial stability threats change over time.

She concludes:

Our post-crisis approach to regulation and supervision is both forward-looking and tailored to the level of risk that firms pose to financial stability and the broader economy. Standards for the largest, most complex banking organisations are now significantly more stringent than standards for small and medium-sized banks, which is appropriate given the impact that the failure or distress of those firms could have on the economy...We anticipate taking additional actions in the near term to further tailor our regulatory and supervisory framework.

Yet even as we finalize the major elements of post-crisis reform, our work is not complete. We must carefully monitor the impact of the regulatory changes we have made and remain vigilant regarding the potential emergence of new risks to financial stability. We must stand ready to adjust our regulatory approach where changes are warranted. The work we do to ensure the financial system remains strong and stable is designed to protect and support the real economy that sustains the businesses and jobs on which American households rely.

Updated

Wall Street opens higher

US markets have moved ahead in early trading, with oil prices on the rise as producers meet in Algeria.

Meanwhile investors are also awaiting a testimony from US Federal Reserve chair Janet Yellen before a congressional committee.

The Dow Jones Industrial Average is currently up 38 points or 0.2%, while the S&P 500 opened 0.16% higher and the Nasdaq composite up 0.12%.

And Draghi concluded by repeating his calls for policy makers to implement structural reforms:

For long-term interest rates to rise in the future we therefore need more investment and structural reforms to lift growth and productivity. As Wolfgang Schäuble said in this house a couple of weeks ago [when he presented the budget for 2017]: we will only get out of this phase of low interest rates if we have more sustainable growth in Europe...

At the height of the crisis, all Member States and citizens showed an enormous commitment to keeping the euro area together when the critics were already talking about the euro’s demise. But we cannot stop here: we need to make sure not only that the euro survives, but that our Economic and Monetary Union thrives.

If we want to succeed, we will need to find common solutions for the problems that we all face...

If we want savers to benefit from higher interest rates in the future, we will need to create investment opportunities to put these savings to a productive use. This is about raising productivity and employment. This is about structural reforms that are a necessary complement to our monetary policy. And Member States have to do their part.

Updated

ECB not to blame for German bank woes - Draghi

And with some blaming the ECB’s negative rate policy for - at least in part -Deutsche Bank’s woes, Draghi said:

We should also consider the full effect of low interest rates on banks. Those who blame ECB policy for the mixed performance of certain German financial firms have been very vocal. But what has been forgotten is that many banks have been able to more than offset declining interest revenues with higher lending volumes, improved loan performance and lower interest expenses, all of which are beneficial to both the banks and their customers.

The ECB’s monetary policy is not the main factor for the low profitability of banks. While some banks’ business models may indeed need to adapt to the current low interest rate environment, they also need to address their own structural issues, such as overcapacity, the stock of non-performing loans and the potential impact of technological innovation. Low profitability is closely linked to low operational efficiency. In Germany cost to income ratios are on average relatively high compared to other jurisdictions. Let us be clear, however, there is no one size fits all banking model and we have different types of banks that are successfully operating in Germany and in the euro area.

Draghi has previously commented that he thinks there are too many banks in Europe.

Updated

Draghi:

We should also not forget that people in your constituencies are affected in different ways by our measures. They are affected as savers, borrowers or taxpayers, and in many cases as all three. What a household may lose in terms of little interest on their bank account, it might save in lower mortgage payments for their home. And it might benefit from rising bond and stock prices in their retirement fund. In fact, evidence shows that between 2008 and 2015 interest payments by households in Germany, as a percentage of gross disposable income, fell more sharply than interest earnings.

And the low financing costs for government bonds help to balance the budget and reduce debt at a considerable speed. This is good news for the Finance Ministry - and thus for taxpayers - which saved in 2015 alone approximately EUR 28 billion on lower than expected interest payments.

Draghi arrives at the Bundestag.
Draghi arrives at the Bundestag. Photograph: Sean Gallup/Getty Images

Updated

On savers, he says:

Yes, the current low interest rate environment reduces the nominal return on saving accounts. But what counts for savers is not the nominal interest rate but the real interest rate, which is the nominal interest rate minus inflation. Real rates are also low, but there have been many episodes of low, or even negative real interest rates in Germany well before the introduction of the euro, as a recent Bundesbank study has shown.

Moreover, savers can on average still earn satisfactory rates of return from diversifying their assets, even when interest rates on deposit and savings accounts are very low. This has also been the case in Germany according to another recent Bundesbank study. But most importantly, whatever financial assets savers hold, they will benefit from a recovery of the economy. So the interest of all of us, including German savers, is the highest possible sustainable growth in Germany and the euro area.

Updated

Draghi continues:

Our measures have delivered. We estimate that they will raise the inflation rate by more than half a percentage point, on average, over 2016 and 2017. They will also contribute to increasing real euro area GDP growth by more than one and a half percentage points cumulatively between 2015 and 2018, which will support job creation.

Updated

Draghi defends ECB policies to German MPs

ECB president Mario Draghi is defending the bank’s actions, including negative interest rates, to the German parliament, at a time when savers in particular are unhappy at the effect on their nest eggs. In his speech released by the ECB, he says:

First, I want to explain why we are pursuing our policies. I want to show how our monetary policy has maintained price stability and countered the threat of a new “Great Depression”. Our measures are working: they are contributing to keeping the recovery on track, thus creating jobs and ensuring a recovery that ultimately also benefit savers and pensioners in Germany and the euro area as a whole. But I do understand that people have concerns. We take these concerns seriously.

I will therefore discuss in more detail – and this is my second point – how our measures affect people’s finances and welfare. As with any monetary policy decision, our measures have distributional effects on citizens. But, on balance, savers, employees, entrepreneurs, pensioners and taxpayers across the euro area, including in Germany, are better off because of our actions – today and tomorrow.

Finally, I will talk about what else is needed. The ECB does not operate in a vacuum: other economic policies are essential to complement our monetary policy. Without them there will be no strong and sustainable recovery. These other policies are a precondition for interest rates to rise again.

Updated

History may be on Deutsche Bank’s side, at least where negotiations with the US authorities are concerned.

Reuters columnist Dominic Elliott has totted up the fines paid by other big banks for mis-selling toxic loans in the run-up to the 2008 crisis, and argues that a $14bn penalty for Deutsche is unfair.

Instead, something in the $5bn (or lower) ballpark might be appropriate.

He writes:

Deutsche Bank can take some heart from previous U.S. mortgage fines. Shares in Germany’s biggest bank by assets have dropped almost a fifth since it confirmed that the United States Department of Justice wants it to pay $14 billion to settle charges of mis-selling mortgage-backed securities. Final bills paid by other banks suggest Deutsche will hand over a fraction of that amount.

Calculating penalties is an inexact science. But one way to assess how much Deutsche might pay is to look at the fine as a proportion of the mortgage-backed securities it issued. Bank of America, for example, settled on a sum worth just over 2 percent of the instruments it underwrote, says KBW. Citigroup was the hardest hit so far, with fines totaling 11 percent of its issuance, according to Goldman Sachs analysts.

Apply that range to the estimated $67 billion of securities that Deutsche underwrote – and deduct the $1.9 billion it has already forked out to the Federal Housing Finance Agency (FHFA) – and the remaining fine could be anything from $200 million to $5.5 billion. That might not be all hard cash, either. Settlement bills can include so-called consumer relief – loan forgiveness or extra credit offered to borrowers over defined periods.

More here: Another fine mess

A Deutsche Bank logo adorns a wall at the company’s headquarters in Frankfurt, Germany.

Although Deutsche Bank clearly has problems, some analysts argue that its troubles are being overstated.

Reaching an agreement with the Department of Justice to pay rather less than $14bn for misselling mortgage-backed securities would remove one dark cloud, and free it up to raise fresh capital if needed.

Neil Wilson, analyst at ETX Capital, explains how Deutsche has some firepower left:

At the end of June, its core tier one capital ratio stood at 10.8% - well above the minimum required by regulators since the financial crisis, albeit below its main peers.

Deutsche is pretty well capitalised and it could raise fresh capital – this would hit the share price but it’s not the end of the world. And it has plenty of assets it can sell quickly to raise the ratio if required. Selling the asset management arm might be required, although this would be negative for earnings growth going forward.

He also argues that we’re not facing a repeat of the 2008 crisis (as UBS chairman Axel Weber said this morning).

It’s not a Lehmans moment in the offing. Banks are generally better capitalised and able to cope with adverse shocks. And Deutsche’s derivatives exposure can be overstated. These exposures are netted out and hedged so it’s not like Deutsche could lose the trillions of dollars as is sometimes hinted at. Nevertheless, these derivatives are hard to value, particularly post-Brexit, and therefore pose a risk, while there is a worry is that a lower credit rating will make it harder to deal in these derivatives, hitting earnings.

But that doesn’t mean that Deutsche Bank isn’t in a fix:

Deutsche’s problem is not capitalisation – it’s just that its costs have soared (mainly through litigation and fines) and it’s not that profitable any more. That is a much longer-term question about its future than whether it’s in need of a bailout to boost some arbitrary capital requirement. Deutsche has to face down the short hedgies first and then look to raise capital. In that sense a ‘whatever it takes’ kind of nod from Berlin may help.”

How things change...

Updated

Building works and cranes at Battsea Power Station, on the south bank of the River Thames last Sunday.
Building works and cranes at Battersea Power Station, on the south bank of the River Thames last Sunday. Photograph: Frantzesco Kangaris for the Guardian

Back in London, tech giant Apple has just announced plans to build a new headquarters at Battersea Power Station.

The new “Apple Campus”, on the south of the River Thames, will take up all six floors of office space at the former power plant, currently being redeveloped.

Around 1,400 Apple staff from across London will move to the new site.

Battersea Power Station is one of the biggest brick-built structures in the world, and a rare example of something that can be truly called ‘iconic’.

It stopped generating electricity in 1983, and stood derelict for decades before a Malaysian consortium bought it in 2012.

German Flag

A spokesperson for the German finance ministry has officially denied Die Zeit’s report that the government was preparing an emergency rescue plan for Deutsche Bank.

Martin Jäger just told a government press conference in Berlin:

“The German government is not preparing a rescue plan, and there is no reason for such speculations”

Jäger also declined to comment on whether there had been any meetings to discuss the situation at Deutsche Bank.

And asked if Deutsche Bank is ‘systemically important’, he replies that everyone knows the importance of the company.

It’s been quite a dramatic morning.

Tara Cunningham of the Daily Telegraph sums up the twists and turns so far....

Updated

European stock markets are up

Optimism that Deutsche Bank can ride out the crisis has pushed shares higher across Europe this morning.

Germany’s DAX index is leading the way, up almost 1%. with Deutsche Bank (+1.8%) leading the charge. In London, the FTSE 100 index is up 52 points, or 0.8%, at 6860.

John Cryan’s insistence that he’s not seeking help from Angela Merkel has calmed the markets, despite the threat of a huge fine from the DoJ.

Joshua Mahony, Market Analyst at IG, says fears of a “banking meltdown” are easing, for now.

The bank is faced with a $14bn that is roughly the equivalent to the current €15 billion market cap. With the government clearly unwilling to bail out the bank, it instead falls upon the firm to start negotiating down the bill and selling off assets, as we have already seen with today’s sale of Abbey Life insurance group to Phoenix Life.

However, there is an argument to be had that the decision from US Department of Justice to completely destabilise the European banking system as retribution for Deutsche Bank’s role in the disruption of the US financial system is far from helpful. The size of the bill seems excessive at best and without the ability to negotiate down the amount, we could see one of the biggest banks in mainland Europe split up.

The main European markets this morning
The main European markets this morning Photograph: Thomson Reuters

Germany denies working on rescue plan

Just in: Germany’s finance ministry is telling reporters that Die Zeit’s story about a rescue is “false”.

They insist that a rescue plan is not being prepared, and there’s no reason to speculate about this.


The headquarters of Germany’s Deutsche Bank in Frankfurt.
The headquarters of Germany’s Deutsche Bank in Frankfurt. Photograph: Kai Pfaffenbach/Reuters

Here’s our Berlin correspondent, Philip Oltermann, on Die Zeit’s claim of a rescue plan:

The German government is working on an emergency rescue plan for Deutsche Bank in spite of the struggling bank’s boss claims that state aid is “out of the question”, according to information obtained by weekly Die Zeit.

Angela Merkel’s government is preparing a two-stage plan for the “worst-case scenario” whereby the US justice department sticks to a threatened $14 billion legal settlement to close out mortgage-securities probes, while Germany’s largest lenders fails to raise enough capital to pay the fine, the newspaper claims in an article published tomorrow.

The first stage would involve attempting to find a solution whereby Deutsche Bank sells parts of its business to a German or foreign company, while the state would issue guarantees for potential losses.

The second stage, which would only apply if such a private solution was to fail, would involve a state-sponsored bailout. According to Die Zeit’s research, shared with The Guardian ahead of publication, the German government is “debating a state takeover of as much as 25 per cent” of the bank.

One advantage of such a solution is that such an intervention would allow the German government to push Deutsche Bank towards a fusion with Commerzbank, of which around 15% are already state-owned.

However, a state-sponsored bailout for Deutsche Bank would provide much embarrassment for a lender whose former boss Josef Ackerman said in 2008 that he would be “ashamed” to take money from the state – as well as a German government which has been insisting on limiting state aid for ailing banks in southern Europe.

The bailout would also come with considerable economic risk. Under a new rule put into force across the EU at the start of the year, no bank can be bailed out with public money until creditors accounting for at least 8 per cent of the lender’s liabilities have contributed towards footing the bill. Deutsche Bank would thus potentially have to become a high-profile test case for this new “bail-in” regime.

Read the Die Zeit story on Deutsche Bank here

Die Zeit’s story about a secret rescue plan for Deutsche Bank is now online, here:

Bundesregierung bereitet Notfallplan für Deutsche Bank vor

I’ve skimmed through it, and....

It says that German Federal Government and the supervisory authorities are preparing an emergency plan for Germany’s largest lender, according to officials in Berlin, Brussels and Frankfurt.

It would be triggered if Deutsche Bank needed to raise additional capital to resolve its disputes with the US justice department, and can’t raise it from the markets.

Under the plan, Deutsche could sell some assets to other banks -- possibly with some form of government guarantee attached.

And there has also been talk of the government taking a 25% stake in Deutche. However, the government continues to hope that this won’t be needed.

Importantly, some government officials favour leaving Deutsche Bank to the EU resolution mechanism - under which creditors and customers are bailed-in. However, that could lead to “new unrest in the financial markets”, Die Zeit adds.

Updated

British Airways planes sitting near Heathrow Airport.

Some breaking news from the aviation industry quickly, as British Airways owner IAG announces a partnership with Qatar Airways that will see them co-operate on a route network covering 70 destinations.

The two carriers said the tie-up would give passengers a wider choice of flights, a broader range of fares and more benefits for members of their frequent flyer programmes.

The agreement involves code-sharing - where airlines sell each other’s seats on certain flights - on all non-stop flights between UK and Doha, allowing the firms to expand their roster of destinations.

Willie Walsh, IAG’s chief executive, says:

“This agreement will benefit customers by giving them access to more destinations through Qatar Airways’ extensive network. It will also allow us to provide easier journeys with better aligned schedules, more frequencies and improved flight transfers.”

The agreements comes into force on 30 October.

Deutsche Bank shares are losing some of their early gains, as investors digest today’s twists and turns.

They’re currently up 1.85% at €10.745, having hit their lowest level in 30 years on Tuesday.

Reuters is reporting that Bafin, Germany’s financial watchdog, is not working on a rescue plan for Deutsche.

Here’s the snap:

Die Zeit’s report of a contingency plan for Deutsche Bank has caused a frisson of excitement.

Laura Noonan, the Financial Times’ investment banking correspondent, tweets:

Here’s Holger Zschaepitz of Welt:

Steve Hawkes of The Sun takes a broader view:

And here’s analyst Gary Jenkins:

Die Zeit: German government working on Deutsche Bank plan

NEWSFLASH: German newspaper Die Zeit is reporting that Angela Merkel’s government is drawing up a contingency plan for Deutsche Bank.

Bloomberg and Reuters have the details:

  • This plan would be triggered if Deutsche Bank needed fresh capital, and couldn’t raise it in the markets.
  • In the ‘worst case scenario’, this would see the German government take a 25% stake in the bank.
  • However, the German government hopes that Deutsche won’t need support.

Updated

Minouche Shafik, deputy governor of the Bank of England, also argues that this isn’t a Lehman moment....

WSJ: How Merkel could help Deutsche Bank

German Chancellor Angela Merkel attends a weekly cabinet meeting of the German government at the chancellery in Berlin today.
German Chancellor Angela Merkel attends a weekly cabinet meeting of the German government at the chancellery in Berlin today. Photograph: Markus Schreiber/AP

The Wall Street Journal reckon that Angela Merkel has four options to help Deutsche Bank.

They are....

1) Drive that $14bn fine down. Put pressure on the lender to negotiate a smaller settlement with the Justice Department, while using back channels between Berlin and Washington to push for leniency

2) Bend the rules. Berlin could use a loophole in the bank-rescue legislation that allows a precautionary state recapitalization of a bank that has failed a stress test. The finance ministry could try to persuade the bank’s supervisor to test Deutsche’s capital cushion, allowing the government to step in with a capital injection should the bank fail the test.

3) Push Deutsche Bank to raise funds. The government could seek to engineer private-sector backing for Deutsche Bank or encourage it to divest its trophy asset-management unit, DWS, potentially worth several billions of euros—a scenario bankers and Deutsche Bank staff have speculated about internally—and wouldn’t involve tapping public coffers.

4) Merge Deutsche Bank and Commerzbank, the country’s second largest lender. Analysts said this in itself wouldn’t magically improve the quality of the merged entity’s balance sheet. But because the government holds a 15.6% stake in Commerzbank, a legacy of a 2009 bailout, such a deal could be used as a backdoor to inject capital into Deutsche Bank without appearing to do so.

Full details here:

Deutsche Bank Puts Germany in a Bailout Bind

Deutsche Bank is leading the top risers on the Frankfurt stock exchange, following Cryan’s interview and the near-£1bn sale of Abbey Life this morning.

Updated

UBS chairman: Deutsche Bank isn't a new Lehman moment

Axel Weber, the chairman of Swiss bank UBS, insists that Deutsche Bank won’t cause a repeat of the Lehman Brothers crisis that rocked the world economy eight years ago.

Speaking on Bloomberg TV this morning, Weber says banks have a lot more capital than before the last crisis, and regulators have made the linkages between individual banks much safer.

Weber (a former president of the Bundesbank), says:

Banks have raised capital by 7 times, some by 10 times, relative to pre-crisis.

The system itself, with all the re-regulation, is much more stable, and so are the individual players. The interlinkages between banks have largely been reduced to a sustainable level.

In my view, the system is much more stable now.

Q: So, this is not a Lehman moment?

No, we are very far in terms of how solid banks are now, from where we were in 2007- 2008, Weber replies.

Updated

Worried about Deutsche Bank? Confused about how Germany’s largest lender got into such a groß pickle? Wondering if Angela Merkel might have to step in?

Our Q&A has everything you need to know:

Deutsche Bank shares jump in early trading

Shares in Deutsche Bank have jumped by 3.3% at the start of trading in Frankfurt.

They have risen to €10.89, up from €10.50 last night.

But that’s still barely half their value a year ago. Even two weeks ago, they were worth €13bn - before the DoJ hit Deutsche with the threat of a $14bn fine.

Deutsche Bank’s share price over the last month
Deutsche Bank’s share price over the last month Photograph: Thomson Reuters

Investors may be reassured by John Cryan’s promise that Deutsche Bank hasn’t asked chancellor Merkel for help, and his optimism that US regulators will compromise.

Updated

Deutsche Bank sells Abbey Life for £935m

Newsflash: Deutsche Bank has just agreed to sell Abbey Life, its UK life assurance group, to £935m.

Deutsche are selling the business to Phoenix Group, Britain’s largest owner of life assurance funds.

This should give Deutsche some much-needed extra capital, to help pay that US fine. However, the deal will also trigger a £800m pre-tax loss (due to goodwill impairment).

Updated

Deutsche Bank are tweeting the key points from CEO John Cryan’s interview to Bild:

Deutsche CEO denies asking Angela Merkel for help

Deutsche Bank CEO John Cryan.
Deutsche Bank CEO John Cryan. Photograph: Michael Gottschalk/Photothek via Getty Images

The boss of Deutsche Bank has insisted that his company will not need government help, as the crisis swirling around Germany’s largest lender intensifies.

John Cryan used an interview with Bild, Germany’s largest newspaper, to reject reports that Deutsche may need state aid.

He firmly denied reports that he had asked Angela Merkel, the German chancellor, for assistance.

“At no point did I ask the chancellor for support. Neither did I suggest anything like that.”

Accepting government support is “out of the question for us”, Cryan insisted, adding that raising new capital is “is currently not an issue.”

He also argued that Deutsche has “fewer risks in the book than before” and is “comfortably equipped with free liquidity.”

Here’s the full interview:

“Staats-Hilfen sind kein Thema” (translation: State Aid is Not an Issue).

Fears over Deutsche Bank have been growing, since it emerged this month that the Department for Justice is planning to fine the bank $14bn for mis-selling toxic mortgage securities in the run-up to the financial crisis.

Cryan, though, is confident that the DoJ can be haggled down, telling Bild that:

“It was clear from the beginning that we would not pay this sum.

The Department of Justice will treat us with the same fairness as American banks that have already agreed on a compromise.”

It’s true that regulators can be ‘haggled down’. However, banking analysts fear that Deutsche would struggle to pay a fine larger than $6bn or so.

Updated

The agenda: Deutsche Bank, Opec meeting, Draghi in Berlin...

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

On the agenda today....

Investors around the globe are watching Deutsche Bank closely, after the bank’s shares hit a 30+-year low yesterday (more on that shortly).

Royal Bank of Scotland is also in focus, after paying a £846m fine to US regulators for misselling mortgage bonds to credit unions a decade ago. Further fines are expected....

Opec energy ministers are due to hold an informal meeting in Algeria this afternoon; could they make noises about a proper deal to freeze production soon?

European Central Bank chief Mario Draghi is heading to Berlin for a grilling from German MPs over monetary policy.

Global stock markets look calm, with investors still nervously eying the US presidential election race.

There’s also a flurry of corporate news, with supermarket chain Sainsbury, holiday firm TUI and personal healthcare group PZ Cussons all reporting.

We’ll be tracking all the main events through the day...

Updated

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Donald Gorske has eaten nearly 36,000 Big Macs. His verdict on the new Big Arch? ‘I think the Big Mac is better’
The Guardian - US
The Guardian - US
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