Shares in Deutsche Bank have slid this morning after the troubled German lender failed to strike a deal with the US Department of Justice to settle a $14bn (£11.3bn) fine.
The bank dropped as much as three per cent in early morning trading, before recovering to stand down 0.9 per cent at €11.98 a share.
The rest of Europe's banking sector was also off, with the Euro Stoxx banking index losing 0.9 per cent and the UK-based FTSE 350 collection of banks losing 0.3 per cent. On the London Stock Exchange, Barclays was down 1.1 per cent, RBS lost 1.4 per cent, while HSBC rose 0.4 per cent.
Fresh speculation over how much Deutsche Bank will end up settling with the DoJ for, and whether the German government would be prepared to step in financially to help prop up the lender has been driving the bank's share price. Chief executive John Cryan was in the US over the weekend for the joint meeting of the International Monetary Fund and the World Bank, raising hopes he could be there to sign a deal for a reduced fine with the DoJ.
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Reports also emerged this morning that the bank was given special treatment in the Eurozone-wide bank stress tests from earlier this year. The European Banking Authority (EBA) allowed Deutsche Bank to include the prospective $4bn proceeds form a sale which had not yet been completed in its balance sheet to boost its headline capital buffer from 7.4 per cent to 7.8 per cent.
Over the weekend ratings agency Standard and Poor's (S&P) maintained its negative outlook on the bank's debt, while stating that the lender would probably need to cough up around $5bn to $6bn to settle with the US authorities.