The leaders of some of Germany’s largest firms have rallied to defend Deutsche Bank, after a week of market turmoil in which the lender's shares hit record lows on fears it will be crippled by a $14bn (£10.5bn) penalty from the US authorities.
Speaking to the Frankfurter Allgemeine Sonntagszeitung, over the weekend, the executives BASF, Daimler, and Siemens said they are backing the bank.
Joe Kaeser, chief executive of Siemens, said the bank's management “has the right goals and has our full confidence”.
While Nikolaus von Bomhard, the chief executive of reinsurance giant Munich Re, said he saw no need to “reduce our business volume” with Deutsche Bank.
“We stand with Deutsche Bank. German industry needs a Deutsche Bank to accompany us out into the world,” added BASF chairman Juergen Hambrecht.
Deutsche Bank has been told to pay up to $14 billion (£10.8 billion) by the US Department of Justice (DOJ) to settle allegations it mis-sold mortgage securities in the lead up to the 2008 financial crisis.
The lender was embroiled in a market storm last week over concerns it did not have enough funds to cover the fine. On Friday, Deutsche Bank’s shares hit records lows in morning trading, as investors took fright at reports that hedge funds are reducing their exposure to the bank.
“Clearly, so long as a fine of this order of magnitude ($14 billion) is an even remote possibility, markets worry,” UniCredit Chief Economist Erik F. Nielsen wrote in a note on Sunday.
Deutsche Bank’s luck turned again by the end of Friday, as its US-listed shares jumped 14 per cent following reports that the bank could be near a lower, $5.4 billion settlement with the DOJ.
John Cryan, the chief executive of Deutsche Bank, said rumours are causing “significant” swings in Deutsche’s stock price, in a letter sent to his staff on Friday.
A spokesman for Chancellor Angela Merkel said last week that there was no reason to speculate about German aid for Deutsche Bank.
Deutsche Bank’s shares won't trade in Germany on Monday because of a public holiday, but it will resume trading on the US market later on the same day.
