In addition to fines and probe, Deutsche Bank faces lost business

By Staff, with files from The Canadian Press | September 29, 2016 | Last updated on September 29, 2016
2 min read

A few hedge funds that use Deutsche Bank as their clearing house have withdrawn excess cash and positions held there, reports Bloomberg.

“While the vast majority of Deutsche Bank’s more than 200 derivatives-clearing clients have made no changes,” the media outlet says, “some funds that use the bank’s prime brokerage service have moved part of their listed derivatives holdings to other firms this week, according to an internal bank document seen by Bloomberg News.

After the news broke, shares of the bank fell 6.5%, reports Bloomberg.

It’s been a rough week. On Wednesday, the European Commission launched a probe into the planned merger of Germany’s Deutsche Boerse AG and the London Stock Exchange Group over concerns the move could stifle competition. And on Monday, Deutsche Bank stock fell sharply after a report that the German government won’t intervene with U.S. officials who are pressing the bank to pay $14 billion to settle an investigation into its sales of mortgage-backed securities.

Read: Deutsche Bank shares plunge amid legal dispute

The possibility of a heavy payout to settle the mortgage issue with the U.S. Justice Department has led to speculation that the bank might need to raise additional capital, a step which can dilute current investors’ shareholding. Deutsche Bank says a capital increase “is currently not on the agenda” and that “we do comply with all regulatory requirements.”

Government spokesman Steffen Seibert said that “there are ongoing talks between Deutsche Bank and the American justice authorities, about which only the negotiating partners can provide information” and said the government declined to take part in “speculation.”

He noted that other banks have settled similar cases with U.S. authorities and that “the government assumes that at the end of this process a fair result will be achieved on the basis of equal treatment.”

Read: The hidden risk in corporate balance sheets

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Staff, with files from The Canadian Press

The Canadian Press is a national news agency headquartered in Toronto and founded in 1917.