* Business leaders defend bank
* Deutsche Bank CEO, CFO on way to USA
* Shares rebound
(Adds finance ministry source, Platow report)
By Arno Schuetze and Kathrin Jones
FRANKFURT, Oct 4 Shares in Deutsche Bank
rose on Tuesday after major clients and even rivals
voiced support for the lender, fearing contagion after concern
over its future last week sent the stock to a record low.
Germany's largest bank has been engulfed by a crisis of
confidence after the U.S. Department of Justice (DOJ) last month
demanded up to $14 billion to settle claims that Deutsche
missold U.S. mortgage-backed securities before the financial
The German bank is trying to reach a settlement before next
month's U.S. presidential election.
Chief Executive John Cryan and finance head Marcus Schenck
are currently travelling to the United States to meet clients
and staff and to attend the annual conference of the
International Monetary Fund.
A person close to the bank said that it would be a surprise
if Cryan did not take the chance to meet regulators over
Deutsche's legal cases.
A media report late on Friday that Deutsche and the DOJ
were close to agreeing a much lower penalty of $5.4 billion
lifted the stock 6 percent, but that report remains unconfirmed.
Deutsche's Frankfurt-listed shares closed up another 1.5
percent on Tuesday. They spiked higher in U.S. trade after
German markets newsletter Platow Brief said the bank is hoping
for a settlement of $4-5 billion by the end of October.
Deutsche Bank is considering scrapping bonuses and raising
fresh capital, Platow Brief added, without citing sources.
German Finance Minister Wolfgang Schaeuble is also scheduled
to attend the IMF meeting, but a finance ministry source denied
speculation that he would meet the DOJ.
"He is not going to Washington to talk about Deutsche Bank,"
the source said. "This is a matter between the bank and the U.S.
authorities. We are not going to be heavy-handed about it."
The German government has denied reports it has a rescue
plan for the bank.
German business leaders from companies including BASF
, Daimler, E.ON, RWE
and Siemens have been lining up to defend the bank in
the German press.
Separately, JP Morgan Chief Executive Jamie Dimon
said late on Monday that he saw no reason that Deutsche Bank
should not get over its problems.
While Dimon's remarks lent some calm to the market, they
showed his concerns about potential contagion in the banking
industry, market analyst Heino Ruland at Ruland Research said.
Analysts at HSBC said that despite Deutsche's operational
shortcomings fears over the bank's solvency were overdone.
"Deutsche Bank should be well-equipped to deal with this
short-term lack of confidence as it has: strong liquidity, solid
funding and 60 percent level 3 assets to tangible equity," HSBC
said in a note to clients reducing its target price to 12 euros
from 14 but keeping its "hold" recommendation.
The number of shares in Deutsche Bank out on loan
to hedge funds and others to either hedge against or profit from
a further fall in the price hit a more than one-year high of 5.6
percent on Monday, according to data provider Markit.
(Additional reporting by Noah Barkin; editing by Giles Elgood)