European stocks—battered this week amid concerns over the health of Deutsche Bank—closed up Friday after its CEO said Germany’s largest bank had strong financial fundamentals, and news reports suggested it was close to a deal with the U.S. Justice Department over its $14 billion fine.
In a memo to Deutsche Bank employees, John Cryan, the CEO, acknowledged the “bank has become subject to speculation. Ongoing rumors are causing significant swings in our stock price.” Indeed, the bank’s stock price slumped this week over concerns about its health. Still, Cryan pointed to “strong fundamentals” at the bank, adding: “We are and remain a strong Deutsche Bank.” Deutsche Bank shares rose sharply Friday. That rise was also helped by news reports that the bank was close to a deal with the U.S. Justice Department on its $14 billion fine over mortgage-backed securities during the 2008 financial crisis. Agence France-Presse reported Friday that Deutsche Bank would pay $5.4 billion instead. Neither the bank nor the Justice Department commented on the report, which buoyed investors who had been wary after the German government and European banking regulators declined to bail out the bank amid reports it was having a liquidity crisis.
The bank’s failure would be significant and have broader implications for Europe and global markets, which have only just recovered from the banking collapse of 2008. The International Monetary Fund said in June: “Deutsche Bank appears to be the most important net contributor to systemic risks” in the global market.