Deutsche Bank plans $7.2 billion mortgage settlement with U.S.

Deutsche Bank (>> Deutsche Bank AG) has agreed to a $7.2 billion settlement with the U.S. Department of Justice over its sale and pooling of toxic mortgage securities in the run-up to the 2008 financial crisis.

The agreement in principle, announced by Deutsche Bank’s Frankfurt headquarters early Friday morning, offers some relief to the German lender, whose stock was hit hard in September after it acknowledged the Justice Department had been seeking $14 billion, nearly twice as much.

It also represents the Justice Department’s first accord with a European bank over misconduct that contributed to the U.S. housing-market collapse. The department sued Barclays PLC (>> Barclays PLC)on Thursday over similar claims.

Deutsche Bank does not plan a capital increase to cover the settlement, a person close to the bank said.

Read on.

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