Deutsche Bank has reached a $7.2bn settlement in principle with the US Department of Justice (DOJ) over the issuance and underwriting of residential mortgage-backed securities (RMBS) between 2005 and 2007. 

The German banking group would have to pay a civil monetary penalty of $3.1bn as part of the settlement.

In addition, it would have to offer $4.1bn in consumer relief in the US, mainly in the form of loan modifications and other assistance to homeowners and borrowers over at least five years.

The bank said that it would have to post pre-tax charges of about $1.17bn in its fourth quarter results as a result of the civil monetary penalty. It does not expect the consumer relief to have a material impact on its earnings.

“The settlement is subject to the negotiation of definitive documentation, and there can be no assurance that the U.S. Department of Justice and the bank will agree on the final documentation,” the German bank said.