Global equity markets have had an unassuming start to the trading week, but the same cannot be said for shares of Deutsche Bank (DB 17.36, -1.02), considering the German banking giant will face heavy selling pressure for the second day in a row.
Recall that yesterday Deutsche Bank tumbled 3.4% after releasing its annual report, which revealed that the bank will raise capital by selling shares at a 35.0% discount to its share price from Friday. While a capital raise was expected by the market, the terms of the offering were unknown until yesterday.
Today, shares of Deutsche Bank have slumped more than 5.0% in pre-market, responding to a Bloomberg report, which claimed the bank will be fined by U.S. regulators for improper conduct in the currency market. A criminal inquiry was closed on Monday without action, but a fine is expected to be announced, according to unnamed sources.
The investigation into Deutsche Bank's activities in the foreign exchange market dates back to 2014, when Deutsche Bank and Barclays became targets for regulators. The probe was later broadened to more banks, which resulted in five pleading guilty in 2015.
A significant portion of the investigation revolved around the use of online chatrooms, where traders from several banks discussed different currencies and positioning. Deutsche Bank has vehemently denied conspiring to manipulate benchmark rates.
While the size of Deutsche Bank's impending fine is still unknown, this represents yet another negative headline for a company that is in a sub-optimal position when it comes to its reputation and financial standing.