LONDON MARKETS: FTSE 100 Drops As Deutsche Bank Fine Takes A Toll On Other Lenders
September 16 2016 - 5:15AM
Dow Jones News
By Carla Mozee, MarketWatch
Unilever in talks to buy company co-founded by actress Jessica
Alba
Stocks in the U.K. fell Friday, with investors spooked by the
prospect that banks will be pushed for hefty settlement payouts
after news of a multibillion-dollar Deutsche Bank fine.
The FTSE 100 lost 0.3% to 6,712.98, with only the heath care
group posting a modest gain. The London benchmark is on track for a
0.9% decline for the week, after a 1.7% fall for the week
before.
Financials were leading the way lower after news late Thursday
the U.S. Department of Justice has asked Deutsche Bank AG (DBK.XE)
(DBK.XE) to pay $14 billion to settle civil claims related to
mortgage-backed securities.
The "number is nearly fourfold higher what analysts were
anticipating," said Naeem Aslam, chief market analyst at Think
Markets UK, in a note.
Deutsche Bank said in a statement
(https://www.db.com/newsroom_news/2016/medien/deutsche-bank-confirms-negotiations-with-doj-regarding-rmbs-en-11684.htm)
that it doesn't intend to pay that amount and that it views the
proposed settlement as the starting point for negotiations with the
Justice Department.
Bank fears spread: In London, shares of Royal Bank of Scotland
PLC (RBS.LN) (RBS.LN) fell 4.1% and Barclays (BCS) (BCS) dropped
2.1%. Those lenders are currently in talks with the Justice
Department.
"Our concern is that this could be just a start, and other
European banks could face a similar fate, and this why investors
are leaving the boat with respect to the banking sector," said
Aslam.
"If the Department of Justice will negotiate the number, that is
a different question," he added.
Other bank shares were trading lower, with Standard Chartered
PLC (STAN.LN) off 2.7%, HSBC PLC (HSBA.LN) (HSBA.LN) down 0.7%, and
Lloyds Banking Group PLC(LLOY.LN)(LLOY.LN) moving down more
modestly, by 0.3%.
Other movers: Unilever PLC (ULVR.LN) shares were off 0.4%. The
maker of Dove soap is in talks to acquire Honest Co
(http://www.marketwatch.com/story/unilever-looking-to-buy-jessica-albas-honest-co-2016-09-15).,
the consumer-products retailer co-founded by actress Jessica Alba,
according to The Wall Street Journal. The deal could be valued at
more than $1 billion.
The pound was buying $1.3207, down from $1.3241 late Thursday in
New York.
(END) Dow Jones Newswires
September 16, 2016 05:00 ET (09:00 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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