FRANKFURT/LONDON: Deutsche Bank jumped the most in almost six months on Friday after a media report that the lender is nearing a $5.4 billion (Dh19.81 billion) settlement with the US Department of Justice (DoJ), less than half the amount initially requested.

The shares closed at €11.57, up 6.4 per cent, the biggest gain since April. Agence France-Presse reported that the lender is nearing a settlement with the DoJ in a probe tied to residential mortgage-backed securities, citing an unidentified person familiar.

Spokesmen for the Frankfurt-based lender and the DoJ declined to comment, when contacted by Bloomberg News.

Deutsche Bank’s stock and debt have been under pressure after the DoJ earlier this month requested $14 billion to settle an investigation into residential mortgage-backed securities.

In a memo to staff earlier yesterday, Chief Executive Officer John Cryan said he is taking DoJ settlements with other banks “as a benchmark”, echoing previous remarks that he expects US authorities to scale back their initial request.

“The amount would be very good news, below what consensus expects now,” said Jerome Legras, an investor at Axiom Alternative Investments, who holds a short position on the lender. “Deutsche Bank has dropped so much as there is so much speculation circulating - at some point people just want to make a profit on short positions.”

Analysts at JPMorgan Chase & Co wrote in a note to clients earlier this month that a US settlement of $3 billion to $3.5 billion would leave the German lender room to settle other legal issues. Any additional $1 billion in litigation charges would erode capital by 24 basis points.

The bank’s common equity Tier 1 ratio stood at 10.8 per cent at the end of June.

Deutsche Bank has long struggled to adapt to an era of tougher capital requirements and diminished trading revenue. Cryan has already said that the lender may fail to be profitable this year, calling it a peak restructuring year, as he eliminates thousands of jobs and cuts risky assets.

The shares had been pushed to a fresh record low earlier yesterday after Bloomberg News reported that some hedge fund clients had reduced their financial exposure to the bank. Deutsche Bank has lost about 49 per cent of its market value this year.

Cryan memo, seen by Reuters, addresses reports of the departure of “some few” hedge fund clients, blaming “speculation” and “certain forces” for what he called unsettling media coverage.

People familiar with the matter said that one large hedge fund in Asia had pulled out collateral from Deutsche amounting to $50 million in the last two days, while other sources said this had happened elsewhere, albeit on a small scale.

Yesterday, Cryan sought to put the moves into perspective.

“We should look at the complete picture,” he said.