News out over the weekend that Deutsche Bank is mulling a pullback in US operations.
This most certainly has to do with paring costs for the bank, but if could also mean that the bank faces sanctions as a result of the Department of Justice probe into fraud charges resulting from the sale of mortgage-backed securities.
This is the same probe that had the DOJ requesting a $14B settlement. Since CEO John Cryan said he would never pay that amount (or couldn’t) and failed last weekend to get a favorable result for the bank, I believe there may be sanctions against the bank going forward, which would necessitate it to pull back from certain security trading operations.
Certainly the bank’s Asset Management division is its most profitable and most troubled. A hit against the asset management arm will cause much more pain for Germany’s largest bank.
This move is one of the last in a desperate attempt to keep the doors open.
The reports say that the bank is not looking for a sale, but a pullback, which tells me there are no buyers, since a bank searching for liquidity is far more open to a sale than shutting down operations to pare costs.