Deutsche Bank will pay a $9.5 million penalty to settle civil charges that it failed to properly safeguard material non-public information generated by its research analysts and of publishing an improper research report, U.S. regulators said Wednesday.
In a note released last week, S&P Global Ratings maintained its negative outlook for Deutsche Bank, saying that the German lender will likely have to pay more than it has accounted for, but should be able to absorb the costs.
Deutsche Bank is holding informal talks with securities firms to explore options including raising capital should mounting legal bills require it, Bloomberg also reports, adding that the lender could also revisit selling its Deutsche Postbank unit or parts or all of its asset-management division, according to the people.
The SEC's order also finds that Deutsche Bank issued a research report with a "BUY" rating for discount retailer Big Lots that was inconsistent with the personal view of the analyst who prepared and certified it as true despite privately telling others that Big Lots should have been downgraded.
Deutsche Bank's management is working frantically to restore investor confidence by accelerating a programme of cost cutting measures following a USA demand to pay up to $14 billion for the misselling of mortgage securities before the financial crisis. The company agreed to resolve the claims without admitting or denying the agency's findings, the agency said.
"This evaluation and compensation structure created a risk that DBSI equity research analysts would share their potentially market-moving nonpublic views about covered companies with DBSI customers", the SEC said.
"It's a very drastic step", said Michael Seufert, an analyst at NordLB with a hold recommendation on the shares.
Barclays imposed a freeze last November, and chief executive Jes Staley said last month the bank had axed 13,600 net jobs since then, or 10% of its staff, mainly due to not filling positions. "In response to the SEC's concerns, further enhancements were implemented".