Deutsche Bank AG is poised to settle U.S. and U.K. investigations into rigging of benchmark interest rates for about 2 billion euros ($2.14 billion), according to a person briefed on the matter.
New York’s Department of Financial Services also may install a monitor at the bank to oversee its compliance with the settlements to be announced as soon as today, according to the person, who asked not to be identified because the talks were private. The Frankfurt-based firm said Wednesday it will log 1.5 billion euros in litigation costs in the first quarter.
The bank, which has already paid 725 million euros to settle a European Union antitrust investigation in connection with the manipulation, said it still expects to report a profit for the first quarter and near-record revenue.
Strong operating results in the first quarter, driven by investment banking revenue, is likely to temper the announced litigation costs, JPMorgan Chase & Co. analysts led by Kian Abouhossein wrote in a note to clients Wednesday.
The penalty would top UBS Group AG’s $1.5 billion settlement to rank as the largest levied in the long-running, industrywide investigation into rigging of interest-rate benchmarks including the London interbank offered rate. About a dozen firms already have paid a combined $6.5 billion since the first deal with Barclays Plc in June 2012.
“We continue to work with the authorities that are reviewing interbank offered rates matters,” said Renee Calabro, a Deutsche Bank spokeswoman in New York.
The stock was trading 1.4 percent higher at 31.89 euros at 9:09 a.m. in Frankfurt for a market value of 44 billion euros. The shares have gained 27 percent this year, outpacing the 15 percent advance of the 45-company Bloomberg Europe Banks & Financial Services Index.
The company will provide more details when it announces earnings April 29.
“It looks like Deutsche Bank must have had an excellent quarter in terms of underlying earnings,” said Dirk Becker, a Frankfurt-based analyst at Kepler Cheuvreux who recommends investors buy the lender’s shares. “Litigation charges are not a surprise: The question is how much more litigation costs will be coming.”
A settlement would remove a legal threat that loomed since the start of Anshu Jain’s tenure as co-chief executive officer in mid-2012. It comes as the firm reviews whether to exit all or part of its consumer-banking operation as part of a wider strategic overhaul that may be announced in coming days. The supervisory board meets Friday and may discuss the overhaul then, according to a person with knowledge of the matter.
Deutsche Bank had set aside 3.2 billion euros in legal reserves at the end of December, the firm said on Jan. 29.