Moody's Cuts Credit Ratings on Deutsche Bank
May 23 2016 - 7:10PM
Dow Jones News
Moody's Investors Service on Monday downgraded Deutsche Bank
AG's credit ratings, citing the bank's challenges in overhauling
operations.
The rating firm—which cut the bank's senior unsecured debt
rating to Baa2, two notches above junk territory—noted the weak
financial performance of Germany's largest bank, along with
low-interest rates and global financial uncertainty that would
continue to pressure results going forward.
The bank's long-term deposit rating was also cut one notch to
A3.
Moody's said Deutsche Bank "is unlikely to achieve its targeted
profitability improvements unless there is a material and sustained
improvement in the operating environment."
The bank, which last year recorded its first annual loss since
2008 on mounting legal and restructuring costs, has pledged to
simplify its structure, lower risks and strengthen its capital base
by 2020.
Last week, at the bank's annual shareholder meeting, Chief
Executive John Cryan said it was too early to say whether the bank
would end the year at a profit or loss.
The ratings assume a possible "modest loss and substantial"
legal costs in 2016, Moody's said.
The bank said last week it had set aside €5.4 billion this year
for legal costs.
On Monday, a U.S. appeals court reinstated civil antitrust
lawsuits against 16 banks, including Deutsche Bank, for allegedly
rigging Libor interest rates.
The London interbank offered rate, or Libor, is a widely used
benchmark to determine interest rates on such things as mortgages
and corporate loans.
Last year, the German bank pleaded guilty to criminal charges in
the U.S. and paid a record $2.5 billion to settle U.S. and British
investigations into the interest rate manipulation.
Write to Maria Armental at maria.armental@wsj.com
(END) Dow Jones Newswires
May 23, 2016 18:55 ET (22:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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