European banks are likely to reach final US settlements over alleged mis-selling of mortgage-backed securities well below the $14 billion claimed by the US Department of Justice against Deutsche Bank, Fitch Ratings has said.
The Department of Justice announced the unexpectedly high claim on Deutsche Bank last week, far exceeding the €3 billion toll the bank expected.
Fitch Ratings choed comments by Deutsche officials that they expect the final total paid by the German lender to be far lower, seeing the DoJ's claim as an opening position.
All US banks have already settled with the Department of Justice and in many cases final settlements were far below initial reports, Fitch said.
Deutsche Bank is the first European lender whose potential settlement with the Department of Jusice has been made public, sparking fears that other banks could face much bigger totals than had been expected.
Barclays, Credit Suisse, HSBC, Royal Bank of Scotland Group and UBS are among the banks waiting to reach settlements with the US over claims they mis-sold mortgage-backed securities in the run up to the 2008 financial crisis.