European stockmarkets opened lower in early trading as the saga over potential billion dollar fines to be imposed on Deutsche Bank continues.
The Xetra Dax index in Germany fell 1.7 per cent in early trading, with Deutsche Bank falling 7.1 per cent as of 8.08am London time. The issues at Deutsche Bank have had consequences for other financial stocks with Commerzbank, Germany’s second-largest bank, also slipping 6.4 per cent in early trading.
Deutsche Bank confirmed earlier in the month that it is in negotiations with the US Department of Justice to settle potential civil claims regarding the bank’s issuance and underwriting of residential mortgage-backed securities (RMBS) and related activities between 2005 and 2007. The starting figure for negotiations of $14bn has seen the bank’s share price tumble in recent weeks, while reports have suggested some hedge funds have started to pull business from Germany’s largest bank. Although Deutsche Bank has stated it “has no intent to settle these potential civil claims anywhere near the number cited”.
In the UK the FTSE 100 index fell 1.3 per cent on opening, as financial stocks struggled. Barclays moved 4.4 per cent lower, while HSBC slipped 1.4 per cent and Standard Chartered fell 2.8 per cent.
In the US stockmarkets faltered overnight with the Dow Jones index closing 1.1 per cent lower, while the S&P 500 index declined 0.9 per cent. Asian markets also felt the pressure with the Nikkei 225 index in Japan closing 1.5 per cent lower.