Deutsche Bank announced last week that it finally reached a settlement in principle with the Department of Justice in connection with the bank’s issuance and underwriting of residential mortgage-backed securities between 2005 and 2007.
Deutsche Bank initially fought the larger charge of $14 billion; the latest figure puts the penalty in the $7 billion range.
Under the terms of the settlement agreement, Deutsche Bank agreed to pay a civil monetary penalty of $3.1billion and to provide $4.1 billion in relief to American homeowners.
“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,” Deutsche Bank said in a statement.
“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 statement added.
Deutsche Bank expects to record pre-tax charges of approximately $1.17 billion in the financial results for the fourth quarter as a result of the civil monetary penalty.