FTSE 100 drops as potential Deutsche Bank fine weighs on lenders


Shares in the UK fell on Friday as investors frightened the prospect of banks being pressured into paying large settlements after the US Department of Justice proposed that Germany’s largest bank pay a multibillion-dollar fine. dollars to settle mortgage-backed securities inquiries.

The FTSE 100 UKX,
-0.42%
lost 0.3% to close at 6,710.28, with only the healthcare group posting a notable gain. The London benchmark fell 1% for the week, adding to a 1.7% decline from the previous week.

Financials led the way down after the Wall Street Journal said Thursday night that the United States asked Deutsche Bank AG DBK,
-0.75%

BD,
-0.24%
pay $ 14 billion to settle mortgage-backed securities civil claims.

The “number is almost four times higher than analysts expected,” Naeem Aslam, chief market analyst at Think Markets UK, said in a note.

German Bank said, in a press release, that he does not intend to pay this amount and that he considers the proposed settlement as the starting point for negotiations with the Department of Justice.

Banking fears have spread: In London, shares of Royal Bank of Scotland PLC UK: RBS

United States: RBS
fell 4.4% and Barclays BARC,
-0.04%

BCS,
-0.21%
fell 2.8%. These lenders are currently in talks with the Department of Justice.

“Our concern is that this is just the start, and that other European banks may suffer a similar fate, and that is why investors are stepping down from the boat when it comes to banking,” Aslam said.

“Whether the Justice Department will negotiate the number, that’s another question,” he said.

Other bank stocks also lost ground, with Standard Chartered PLC STAN,
-0.28%
2.7%, HSBC PLC HSBA,
+ 0.10%

HSBC,
+ 0.50%
down 0.9%, and Lloyds Banking Group PLC LLOY,
-0.08%
LYG,
-0.39%
loss of 0.4%.

Healthy boost for healthcare: Pharmaceuticals stocks in the UK climbed, boosted by reports that the South African company Mediclinic was preparing an offer for the remainder of the FTSE 250 Spire Healthcare Group PLC SPI component,
+ 0.22%.

Spire shares jumped 8.1%, while Shire PLC UK: SHP
advanced by 3.2% and AstraZeneca PLC AZN,
-0.47%

AZN,
+ 1.18%
gained 2%.

“South Africans are making their move. Mediclinic, if successful in bidding on Speyer, would be the second South African company in as many months to use the decline in the British pound against the GBPZAR rand,
+ 0.03%
to take over a UK company after Steinhoff’s acquisition of Poundland, ”said Jasper Lawler, market analyst at CMC Markets, in a note.

Other movers: Unilever PLC ULVR,
+ 0.51%
UL,
+1.29%
fell 0.9%. Soap maker Dove is in talks to acquire Honest Co., the consumer products retailer co-founded by actress Jessica Alba, according to the Wall Street Journal. The deal could be valued at over $ 1 billion.

GBPUSD,
-0.04%
was buying $ 1.3084, up from $ 1.3241 Thursday night in New York.

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