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S&P reaffirms Deutsche Bank ratings after restructuring

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S&P reaffirmed Deutsche Bank's credit ratings on Monday, calling a restructuring plan "necessary," while noting that the bank still faces a challenging economic environment in Europe.

[NEW YORK] S&P reaffirmed Deutsche Bank's credit ratings on Monday, calling a restructuring plan "necessary," while noting that the bank still faces a challenging economic environment in Europe.

The restructuring represents "a logical and necessary reaction to the deeper environmental challenges that Deutsche Bank now faces," S&P said. "We view the downsizing and reinvestment plans as executable, albeit not without risk."

S&P Global Ratings classified Deutche's long-term debt at "BBB+" and short-term debt at "A-2," both solidly within investment grade.

Deutsche's restructuring plan, unveiled on July 7, includes the elimination of 18,000 jobs and exiting equities sales and trading.

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The move is part of an effort to shift the German bank's focus away from the United States and other foreign markets and back towards Germany and Europe after a potential merger with fellow lender Commerzbank was abandoned.

But Deutsche Bank, like other European financial heavyweights, "faces a more difficult economic and market environment," S&P said.

"We see no reason to think this very weak revenue environment will improve in the coming years, although some activities continue to see secular growth."

S&P said it could lower its rating on Deutsche Bank in the next 12-24 months if the bank fails to hit its targets.

AFP