The U.S. Justice Department should settle its ongoing probe into Deutsche Bank as quickly as possible to deliver some certainty to financial markets, Christine Lagarde, the managing director of the International Monetary Fund (IMF), advised on Thursday.
Reports last month that the Justice Department was seeking a $14 billion penalty over faulty mortgages roiled the bank’s stock DB, +0.81% although subsequent stories have raised some doubts about size of that figure.
“A settlement would certainly be welcomed because it would deliver some certainty as to what weight the bank will have to carry and whether it matches with its provision or not. So the sooner the better,” Lagarde said in an interview on Bloomberg Radio.
Deutsche Bank is a “systemic institution” that is closely interrelated with other financial institutions, Lagarde said.
She called on the bank’s management to examine its business model and size in light of expectations that interest rates around the globe may stay lower for longer than anyone now expects.
But Deutsche Bank is not alone and many financial institutions need “to do that job,” Lagarde said, noting an IMF report earlier this week that concluded a quarter of the world’s bank won’t survive even if the global economy recovers and interest rates rise.