Deutsche Bank, the largest bank and financial services company in Germany is expecting to record approximately €1.5 billion in litigation costs for the first quarter of 2015.

Deutsche Bank

Deutsche Bank said most of the litigations costs are not tax-deductible. The global banking and financial services company added that it will be profitable and will report near-record revenues for the first quarter. It is scheduled to release its quarterly financial results on April 29.

Regulators in the United States and United Kingdom are investigating Deutsche Bank due to allegations that it was involved in manipulating the bench mark interest rates including LIBOR.

Regulators also investigated Deutsche Bank on accusations related to its involvement in currency manipulation as well as its alleged violations of U.S. sanctions against Iran.

Deutsche Bank expected to reach LIBOR settlement Thursday

Regulators in the United States and United Kingdom are expected to announce a settlement with Deutsche Bank related to the LIBOR scandal on Thursday, according to Reuters.

Sources familiar with the situation told Reuters that Deutsche Bank was working with pertinent authorities to settle the case. They suggested that the penalties are likely more than $1.5 billion.

Last year, the German banking and financial services company allocated $3.4billion for litigation expenses. Deutsche Bank also outlined additional $1.9 billion for potential risks. The company also indicated that it could face another $4.8 billion in mortgage repurchase claims.

Fitch Rating commented in a recent note, “The full extent of DB’s litigation costs is unknown. It is likely that costs at DB will remain a drag on its future results despite the existing coverage (reserves).”

Deutsche Bank failed Federal Reserve’s stress test

Last month, Deutsche Bank failed the Federal Reserve’s stress test. The Federal Reserve’s Comprehensive Capital Analysis and Review (CCAR) for 2015 showed that the German banking and financial services company had deficiencies in several areas including risk-identification, measurement and aggregation processes, approaches to loss and revenue projection, and internal controls.

The stock price of Deutsche Bank are trading $33.94 per share, up by nearly 2% around 3:39 in the afternoon in New York.