How big is the penalty?

The US Department of Justice has started the negotiations at $14bn. That would make it one of the biggest settlements for mis-selling mortgage bonds, a scandal that erupted in the wake of the banking crisis when it emerged that banks had packaged up mortgages and sold them on to investors as residential mortgage backed securities.

It is the same, almost, as Deutsche Bank’s value on the stock market of about €16bn ($17.8bn).

How big, and how healthy, is Deutsche Bank?

The bank’s assets are valued at €1.6tn ($1.8tn), or half a year’s output for the entire German economy. But weight those assets for risk, and the number is €397bn ($441bn). Germany has lots of banks, with more branches per person than comparable economies; on the high street, Deutsche Bank is one among many.

When the European Banking Authority simulated a financial crisis based on banks’ balance sheets in June, the second worst performer was Deutsche Bank. Only Italy’s extremely troubled Monte dei Paschi di Siena came off worse.

Deutsche would point to its stock of easy to sell assets – its liquidity buffer – which stands at €215bn ($239bn) as a sign of its financial strength.

Investors fear that if the settlement with the justice department is as large as first suggested, it put the measures used by regulators to gauge its financial health under pressure. The bank’s share price has halved in the last 12 months, and its stock market value is 25% of its the assets on its balance sheet.

Potential investors may also be put off by Deutsche Bank’s unusually large engagement with over-the-counter derivatives – complicated financial products such as futures contracts which banks sell to one another off the open market.

What are the implications for the rest of the banking system?

The International Monetary Fund said in June that Deutsche Bank was responsible for about 30% of the risk in the global financial system, and concluded it presented the biggest risk to the financial system, in part because of its connections to other major banks.

What can Deutsche Bank sell?

The bank has several subsidiaries (among many hundreds) which it could put up for sale. Abbey Life in the UK has already been sold, and the bank is also planning to dispose of its minority stake in Huaxia, a Chinese bank. But some of its other potential selloffs are more problematic; its profitable asset management division is an attractive asset, but losing it would dent the bank’s already soggy bottom line. Its German retail subsidiary Postbank is theoretically worth over €6bn, but proving tricky to sell off.

There has been talk that Deutsche could be put together with its domestic rival Commerzbank. One of the reasons for the trough in its share price is the expectation that it will sell more shares to investors. This will bolster its crucial regulatory capital ratios but putting more shares in circulation means their value is likely to go down.