business

VW shares fall as regulatory probes intensify

March 09, 2016

Volkswagen shares fell as much as 4% on Wednesday, as an analyst warned the carmaker might need to make a big cut to its dividend to help pay for the growing number of regulatory and judicial probes over its emissions test cheating.

On Tuesday, a source briefed on the matter told Reuters that the US Justice Department had sent Volkswagen (VW) a subpoena under a bank fraud law as part of its investigations into the scandal. The law allows the government's civil division to investigate fraud over the last 10 years.

At 0930 GMT (5.30pm MYT), the shares were down 1.8% at €110.25 (RM498), paring earlier losses of as much as 4%.

VW faces investigations around the world after it admitted in September to installing software in up to 11 million vehicles that allowed them to emit up to 40 times legally allowable pollution on the road.

DZ Bank analyst Michael Punzet said the subpoena, combined with news that prosecutors in the city of Braunschweig had widened their probe to include a greater number of suspects, had spooked investors.

"Taken into account the possible higher financial burdens due to extended investigations could lead to a deeper dividend cut than currently expected by the market," Punzet said in a note, reiterating his 'sell' rating on the stock.

Last month, a federal judge imposed a March 24 deadline for VW to say whether it has found a fix for 600,000 US diesel vehicles that is acceptable to US regulators.

The US Justice Department in January sued VW for up to US$46 billion (RM189.30 billion) for violating US environmental laws. VW also faces more than 500 lawsuits from US owners.

Settlement talks are still ongoing with the US Justice Department, the Environmental Protection Agency and California Air Resources Board that could include buyback offers and fixes for vehicles. – Reuters, March 9, 2016.