Deutsche Bank (DBKGn.DE) said it would fight a $14 billion demand from the U.S. Department of Justice to settle claims it missold mortgage-backed securities, a shock bill that raises questions about the future of Germany's largest lender.

The claim against Deutsche, which is likely to trigger several months of talks, far exceeds the bank's expectations that the DoJ would be looking for a figure of only up to 3 billion euros ($3.4 billion).
The demand adds to the problems facing Deutsche Bank's Chief Executive John Cryan, a Briton who has been in the job for a year.

The bank only scraped through European stress tests in July and has warned it may need deeper cost cuts to turn itself around after revenue fell sharply in the second quarter due to challenging markets and low interest rates.

Eoin Treacy's view

The repercussions of the housing bubble that accompanied lax, or indeed no, lending standards in the USA which climaxed in the credit crisis continue to rattle through the courts. However I wonder does anyone else see a similarity in the fine handed down to Deutsche Bank with that handed down to Apple by the EC. Both are in the region of $14 billion and represent punitive reprisals from governments expressing frustrations against foreign rather than domestic owned companies. 

With a market cap of €16 billion this fine is beyond the ability of Deutsche Bank to pay so there is no chance that $14 billion is the final figure but it is heavily bearish for the share. In fact the risk with Deutsche is that equity holders are wiped out in a nationalisation even though the German government is very unlikely to condone paying the above fine to the USA. 

Having closed a short-term overextension relative to the trend mean the DJ Euro Stoxx Bank Index has at least paused below the psychological 100 and will need to sustain a move above that level if potential for a return to medium-term demand dominance is to be credible.