European Banks Deutsche and Credit Suisse agree $12.5bn US fines

Deutsche Bank (IOB: 0H7D.IL - news) and Credit Suisse (IOB: 0QP5.IL - news) have agreed to pay $7.2bn (£5.9bn) and $5.3bn (£4.3bn) respectively in penalties relating to the collapse of the US housing market before the financial crisis.

The Swiss lender announced it had reached a deal with the US Department of Justice hours after a similar move by Deutsche.

While the German bank's sum is half the $14bn originally sought by investigators, it is more than $2bn above the amount analysts expected Europe's third-largest bank to shell out.

Deutsche also warned the deal, following four months of negotiations, was subject to potential revision. Its share price rose more than 4% in early trading in Frankfurt before settling 2% higher.

US officials refused to comment on the bank's announcement though they did confirm that Barclays (LSE: BARC.L - news) was also to be sued in relation to the sale of mortgage-backed securities.

The UK-based bank responded by saying it rejected the case and would seek to have it dismissed.

The case against Deutsche, the third-largest bank in Europe, centred on its behaviour in the US home loans sector.

A 2011 US Senate sub-committee report found widespread "troubling practices" with one trader apparently telling colleagues that many mortgages the bank was packaging into securities were "crap" and "pigs."

Deutsche said that as part of its agreement with the DoJ it would pay a civil penalty of $3.1bn and provide $4.1bn in consumer relief, such as loan forgiveness.

It had made provisions of more than $5bn to cover the costs of the case but said it would set aside a further $1.2bn in its fourth quarter.

Credit Suisse said of its sanction: "Under the terms of the settlement, Credit Suisse would pay to the DoJ a civil monetary penalty of $2.48bn.

"In addition, Credit Suisse would provide consumer relief totaling $2.8bn over the course of five years post settlement."

While many US banks including JPMorgan (LSE: JPIU.L - news) , Citi and Bank of America (Swiss: BAC-USD.SW - news) have also agreed settlements with the DoJ, the inquiry is yet to reach a resolution for RBS (LSE: RBS.L - news) as well as Barclays.

The lawsuit against Barclays accuses the bank and its employees of misrepresenting the quality of loans they sold to tens of thousands of investors between 2005 and 2007 at a cost of them of billions of dollars.

Barclays said in reponse: "Barclays considers that the claims made in the complaint are disconnected from the facts.

"We have an obligation to our shareholders, customers, clients, and employees to defend ourselves against unreasonable allegations and demands."

"Barclays will vigorously defend the complaint and seek its dismissal at the earliest opportunity."

Its stock closed 0.9% down on the FTSE 100 on Friday.