In Brief

Deutsche Bank shares plunge to 24-year low

Price drops 7.5 per cent as markets worry about bank's ability to meet possible $14bn fine from US justice department

Deutsche Bank shares recorded another catastrophic one-day fall on Monday, as markets fretted it will be unable to meet a massive fine in the US.

Stock tumbled 7.5 per cent, says the Financial Times, the "worst single-day loss since the lender was threatened with a prospective $14bn (£11bn) fine from the US Department of Justice earlier this month".

That left the price languishing at €10.55, the lowest since "at least" 1992. By some measures it was a nadir not seen "since the mid-1980s", says The Guardian, while the Daily Telegraph reports it was a "record low".

Shares were already down by around half in the past year over fears Deutsche does not have enough reserve capital. The FT reports the International Monetary Fund already ranked it as the "riskiest globally significant bank".

But the threat of the massive penalty over the sale of mortgage-backed securities in the lead-up to the financial crisis has induced fresh panic among investors.

The fine would be more than double the $5.5bn the bank has set aside to deal with litigation issues, including any penalty relating to an investigation into allegedly sanctions-busting trades in Russia.

Reports over the weekend said German Chancellor Angela Merkel told Deutsche boss John Cryan the bank can expect no state help to deal with a capital crisis.

Deutsche says it has more than enough capital to meet its regulatory obligations and has never asked for government support. It also claims the eventual fine will be nowhere close to the $14bn demanded so far.

However, the prospect of a fine that could cause a real existential crisis for a major global bank has worried investors around the world, with the Telegraph reporting the FTSE 100 lost 1.3 per cent, or £23bn, yesterday.

Banks were unsurprisingly the worst hit, with Royal Bank of Scotland, which is also in negotiations with the US Department of Justice over the same issue, losing more than five per cent to 177.5p.

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