Deutsche Bank Hits A New Low

Shares of Deutsche Bank AG DB were trading lower by nearly 5 percent early Monday at $12.17, which marksthe lowest the stock has ever traded at.

According to Bloomberg, Deutsche Bank could be forced to raise capital to help finance a $14 billion fee given by the U.S. Justice Department to settle a probe tied to the bank's residential mortgage-backed securities practices prior to the financial crisis.

Specifically, the German bank allegedly misled investors over the quality of subprime mortgage bonds it created and sold prior to the 2008 financial crisis.

Related Link: Eurobank Stocks Under Pressure Amid Deutsche Bank's $14 Billion Probe

In European trading, Deutsche Bank's German-listed stock slumped more than 6 and contributed to the Bloomberg Europe Banks and Financial Services Index falling more than 2 percent.

Bloomberg cited a German-based publication Focus magazine, which reported that Germany's government had ruled out backing the bank financially. A government spokesperson told reporters in Berlin that there are "no grounds" for speculation over state funding.

Many investors are working under the assumption that Deutsche Bank's final settlement with the U.S. Justice Department will be much less than $14 billion. However, Daniel Regli, an analyst at MainFirst, told Bloomberg the fact that the settlement is a topic of conversation within the German government "might be a concern" to investors.

Bloomberg noted that a $3.5 billion settlement would leave the bank with enough cash to settle other pending legal issues, such as inquiries into its precious metals trading. However, every additional $1 billion would erode 24 basis points in capital and any settlement above 5.4 billion euros implies a capital raise is required to cover the fine.