Deutsche Bank pays $7.2bn to settle mortgage securities case

The Bank has agreed to pay a civil monetary penalty of $3.1 billion and to provide $4.1 billion in consumer relief in the United States.

Deutsche Bank says the consumer relief is expected to be primarily in the form of loan modifications and other assistance to homeowners and borrowers, and other similar initiatives to be determined, and delivered over a period of at least five years.

In a statement, Deutsche Bank said the settlement is "subject to the negotiation of definitive documentation, and there can be no assurance that the U.S. Department of Justice and the bank will agree on the final documentation".

The Bank now expects to record pre-tax charges of approximately $1.17 billion in the financial results for the fourth quarter as a consequence of the civil monetary penalty. However the financial consequences of the consumer relief are not currently expected to have a material impact on 2016 financial results.

In September, Royal Bank of Scotland agreed to pay $1.1bn to settle two lawsuits relating to the mis-selling of mortgage-backed securities in the run up to the financial crisis.

RBS is still facing claims from the US Department of Justice and the Federal Housing Finance Agency.