Ratings agency S&P on Friday downgraded German giant Deutsche Bank’s long-term credit rating from A- to BBB+, a day after a US banking regulator classified the firm’s American subsidiary as an at-risk institution.
Standard & Poor’s revised rating comes at a tumultuous time for Germany’s largest lender, whose newly appointed chief executive Christian Sewing has tried to reassure investors that Deutsche is ready to do what it takes to return to profitability after years of losses.
Deutsche last month announced it would slash 7,000 jobs around the world as part of its revamp.
‘While we consider management is taking tough, although likely inevitable, actions and proposes a logical strategy to successfully restore the bank to more solid, sustainable profitability over the medium to long term, the bank appears set for a period of sustained underperformance compared with peers, many of whom have now finished restructuring,’ Standard & Poor’s said in a statement.
‘We see significant execution risks in the delivery of the (bank’s) updated strategy amid a continued unhelpful market backdrop, and we think that, relative to peers, Deutsche Bank will remain a negative outlier for some time,’ it added.
S&P’s revision comes a day after the US Federal Deposit Insurance Commission classified Deutsche among its ‘problem banks’.
The Federal Reserve has also branded it as being in ‘troubled condition’.