Following are excerpts from a CNBC interview with Carolin Roth and Joerg Eigendorf, Head of Communications & Senior Group Director at Deutsche Bank.
CR: The opening proposition from the DOJ, that's 14 billion dollars. How did you react when you saw that number? Were you surprised or were you relaxed because you know that number is going to come down anyway?
JE: That's exactly what you were saying. It's a case, we know this is a number, a very high number, This was a case with other banks, with our peers in the united states, and we all saw that these numbers go down significantly then and so we are very confident that we are able, that we will be able to negotiate this number significantly down when we are sure that we will treat it fairly in this process so are quite optimistic that this number definitely won't be the final one.
CR: You say, and I'm quoting here, "[you] have no intent to settle these claims anywhere near the number that was sighted" What number are you willing and are you able to pay?
JE: We are not willing to negotiate that deal in public. For us, it's not a good thing that this number is out right now. We didn't want this number to leak out because we know this has a certain dynamic on the negotiations. So we are now, we want this negotiations to be confidential, stay confidential and quickly to find a good result with the department of justice in Washington.
CR: But problem is and that's also the worry and part of investors today, and reason for the precipitous decline in the share price once again, is that the litigation reveres that you've put aside for this year – only 5.4 billion dollars – that's not enough to cover a fine that might just come down to seven or eight billion dollars just how concerned are you?
JE: We are not that concerned because we know it's a very comfortable cushion we have here. We have that number already out there, we've said there will come additional, that it's possible that there is additional litigation costs coming up. But look at the capital Deutsche Bank has right now, yes we want to have more capital but we are in a situation right now where we are in a comfortable arrangement, we still have time to originate the capital organically and that's not a question of months but years, we can develop in that direction so there is no reason to be worried right now. This is the first number the DOJ has given us. We will now negotiate this constructively in the next weeks and hopefully we will find a good result and because we want to have that uncertainty out of our stock, we want to concentrate on our business and these negotiations are always kind of a distraction so it would be great to finish down these negotiations as soon as possible.
CR: You do seem quite relaxed here, but I do want to remind you that your capital levels, they're not all that strong. The core tier 1 equity ratio is only 10.8%. That's toward the lower end of the industry average. Are you sure that you won't have to go back to the markets and raise capital? That's something that's you've rules out before. But in this case, are you sure you can circumvent that?
JE: Look the information the market has already that we are closing our deal in China, the Hua Xia banks, then we will be above 11%. We can also say yes by regulatory standards that we still need to accumulate capital in the next two years but in the short term there is no need at all for us to say right now we have to under these circumstances because of this news to act in this direction. We are in a situation where we try to focus on our business, get our strategy done, restructure the bank. Moving forward, we always said that 2016 and 2017 are very difficult years. We have to move forward in the right direction and then the operative strength of the bank will be seen again.
CR: You've stated just now that you are on track to sell that stake in the Chinese bank Hua Xia. On top of that, do you think there will be any more fire sales needed to cover the amount of the fine?
JE: We are working on our strategy, we have a plan. If you look in the inside of the bank, not everything gets visible right now where we are making progress. Once it has been seen, people will understand that management is doing its job and this is going forward and I don't want to take part in any kind of speculation of this kind. We haven't done fire sales, all we have done so far is we are planning a process and we stick to the process.
CR: Your stock, trading at two thirds of both value. Shares have fallen some 46% this ear. I'm just wondering just how nervous is senior management right now?
JE: If you had seen our senior management in the last couple of days you would have seen that they are not nervous once we got the number. What is worrying if something like that gets public. That is something we are worried about. Right now, we have to look at the credit market. And if you look today at our credit development, it's not worrying. That's the most important marker for us right now. All banks in Europe have a difficult situation in Europe right now. All banks in Europe are in an environment where it is difficult to make the revenues you want to make and the money policy of the ECB doesn't make it easier for us. So this is an environment which accounts for everybody but there is nothing to be overly nervous in any way because we knew that this would be a high number. We knew it and I'm in permanent interaction with our management board and we had talked to the members of the management board. They are very rational and walking through the process. What we want to do now is finish this mitigation because you are absolutely right, our share price is down, and one of the reasons is the high insecurity we see with the litigation.
CR: Do you think that US regulators are simply too punitive? Do you think there was a political element in here in terms of political retaliation?
JE: We have no assumption – we have no need for an assumption that we are not treated fairly. We assume that we will be treated fairly like our US peers in the US and we will find a very constructive result hopefully as soon as possible.
+44 (0) 20 7653 9300
CNBC is the leading global broadcaster of live business and financial news and information, reporting directly from the world's major financial markets via three regional TV networks in Asia, EMEA and the US. CNBC.com is the preeminent financial news source on the web featuring video, real-time market analysis and dynamic financial tools. CNBC serves the world's most powerful audience of CEOs, senior executives, the financial services industry and private investors and is available in more than 381 million homes worldwide. CNBC is a division of NBCUniversal.