[Photo: Tilman AB  / Wikimedia Commons]

Deutsche Bank and the U.S. Department of Justice are closer than ever to agreeing on a penalty for the bank’s sale of toxic mortgages prior to the credit crisis.

"There is a good chance that the case will be off the table before Christmas," the person said, adding that an announcement could come as early as Wednesday.

Deutsche Bank, which used to be a major player in the U.S. mortgage market, is reportedly set to pay far less than the $14Bn penalty the U.S. authorities had initially asked for in September. This would remove the biggest uncertainty facing the bank, which had sought a deal before President-elect Donald Trump takes office on January 20.

It would appear that Deutsche Bank’s relationship with president-elect Trump might be incentivizing federal regulators to offer and accept a ‘low-ball’ settlement figure, since any delay in negotiations would likely turn against them – i.e., weaken their negotiating position.

In September, news that Germany's flagship lender faced a penalty of up to $14 billion caused Deutsche's shares to plunge and later prompted the bank to deny speculation that it needed a bailout from Germany.