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Deutsche Bank Is Converting Corporate Loans Into Marketable Securities

September 20, 2016

Deutsche Bank Shares SoarDeutsche Bank Shares Soar
People walk past a branch of Deutsche Bank on February 9, 2016 in Berlin, Germany. Photograph by Sean Gallup/Getty Images

Deutsche Bank (DB), which faces a hefty fine from the U.S. Department of Justice over mortgage-backed securities, is planning to convert billions of dollars of corporate loans into marketable securities, according to a person close to the matter.

This year’s deal volume is to be lower than last year’s $5.5 billion and is unrelated to the mortgage probe. The process will be handled by the bank, the person said.

A study by German economic research institute ZEW found in August that the European lender had the highest potential capital shortfall of 19 billion euros.

Bloomberg earlier reported the bank’s deal to securitize the loans.


The bank has warned it may need deeper cost cuts to turn itself around, after revenue fell sharply in the second quarter because of challenging markets and low interest rates.

Last week, the U.S. Department of Justice levied a fine of $14 billion to settle claims the bank mis-sold mortgage-backed securities.

The bank responded in a statement that it had no intention of settling those potential civil claims anywhere near the number cited and Germany’s Finance Ministry said it expected a fair result in the mortgage case.

A $14 billion fine, or even half that sum, would still rank among one of the largest paid by banks to U.S. authorities in recent years.