Deutsche Bank To Pay €1.4 Bln To Settle RMBS Litigation With FHFA

(RTTNews) - Deutsche Bank AG (DB), Germany's biggest lender, said Friday that it has agreed to pay €1.4 billion to settle its residential mortgage-backed securities litigation with the U.S. Federal Housing Finance Agency as conservator for Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB). Of the total settlement amount of €1.4 billion, or about $1.93 billion, about $1.63 billion will go to Freddie Mac and $300 million will go to Fannie Mae.

Deutsche Bank said the amount is already substantially reflected in its existing litigation reserves and that no material additional reserves will be taken for the settlement.

The settlement resolves Deutsche Bank's single largest mortgage-related litigation case, which alleged that the Bank did not provide adequate disclosure about certain residential mortgage-backed securities sold to Fannie Mae and Freddie Mac between 2005 and 2007.

Deutsche Bank said it has exited the mortgage businesses that gave rise to those claims and that it has further improved its controls.

"Today's agreement marks another step in our efforts to resolve the Bank's legacy issues, and we intend to make further progress in this regard throughout 2014," said Jürgen Fitschen and Anshu Jain, Co-Chief Executive Officers of Deutsche Bank.

The Federal Housing Finance Agency said this is the sixth settlement it has attained pursuant to the 18 private-label mortgage-backed securities lawsuits filed in 2011. The agency said it remains committed to satisfactory resolution of the remaining actions.

Apart from Deutsche Bank, details of settlements with two other institutions - JPMorgan Chase & Co. (JPM) and UBS AG (UBS) - have been disclosed.

Earlier this month, the European Commission Wednesday fined 8 banks, including Deutsche Bank, a total of €1.71 billion for participating in illegal cartels in the interest rate derivatives markets covering the European Economic Area. Of the total, Deutsche Bank will pay € 725 million.

Deutsche Bank shares are currently trading at $46.51, up 56 cents or 1.21%. The company's shares closed 1.43% higher at €34.00 in Frankfurt.