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Rating Action:

Moody's Affirms Baa2 Debt and A3 Deposit Ratings of Deutsche Bank AG. Outlook Stable

06 Mar 2017

New York, March 06, 2017 -- Moody's Investors Service today affirmed the ratings of Deutsche Bank AG (Baa2 senior debt, A3 deposits, A3(cr) Counterparty Risk Assessment, ba1 Baseline Credit Assessment) following Deutsche Bank's announcement of a fully underwritten €8 billion raise of common equity and major course corrections to its 2020 strategic plan. The outlook on Deutsche Bank's long-term debt and deposit ratings remains stable.

A full list of affected ratings can be found at the end of this press release.

RATINGS RATIONALE

Moody's said these measures, on top of the firm's progress in de-risking its balance sheet, are positive developments for DB's bondholders. Most importantly, the capital raise gives DB more time and financial leeway to achieve the objectives of the revised 2020 plan and should bolster customer and counterparty confidence. However, sustainable improvement to the bank's credit strength, and ratings, will depend on the success of its ongoing reengineering that is intended to provide a more stable stream of earnings and capital.

The capital raise which will increase DB's Common Equity Tier 1 ratio by about 200 basis points to over 14% pro-forma, as of year-end 2016, is an immediate benefit, providing a significant financial cushion for management to continue to execute its ambitious plan to reengineer the firm, now five years in the making. DB also intends to operate with a CET1 ratio above 13%, that will allow the bank to pursue business and revenue growth more assertively, following losses in 2016 that hindered efforts to strengthen and stabilize profitability and led to some customer and counterparty attrition.

DB's announcement of a settlement with the US Department of Justice in late 2016 has helped alleviate concerns, and momentum has picked up in many businesses in January and February along with improved market conditions.

"The equity capital raise is a powerful response to the challenges DB faced in 2016 and is likely to amplify the positive trends since the DOJ settlement" said Peter Nerby, Moody's lead analyst for Deutsche Bank.

DB will use its increased financial flexibility to recalibrate the 2020 plan. A major strategic reversal is the decision to retain, rather than dispose of, Deutsche Postbank AG which management plans to combine with its other German retail operations in the hopes of building a source of more stable earnings in 2020 and beyond. Moody's believes that DB's 65% cost/income goal for the combined German retail operation will be difficult to achieve but is critical to its success. The bank also plans to IPO a minority stake in its asset management division. Finally, the bank will reconfigure the existing Global Markets, Corporate Finance and Transaction businesses into a single Corporate and Investment Bank division. Streamlining and re-focusing these businesses will help DB build leaner, more profitable franchises that more closely match with its long-term strategic goal to simplify and de-risk the bank while revitalizing its operating platform and processes.

While the capital raise and strategic actions are credit positive, upward rating pressure will depend on the bank's continued progress toward growing earnings from more stable and less capital intensive businesses while investing to strengthen the technology platform and control infrastructure of the bank. Our current stable rating outlook assumes modest profitability levels in 2017. Downward rating pressures would develop if there are significant delays or failures to substantially achieve the 2020 plan. This could result from additional environmental headwinds or from additional litigation costs beyond those covered by existing reserves.

LIST OF AFFECTED RATINGS

Issuer: Deutsche Bank AG

..Affirmations:

....Long-term Counterparty Risk Assessment, affirmed A3(cr)

....Short-term Counterparty Risk Assessment, affirmed P-2(cr)

....Long-term Deposit Ratings, affirmed A3 Stable

....Short-term Deposit Ratings, affirmed P-2

....Long-term Issuer Rating, affirmed Baa2 Stable

....Senior Senior Unsecured Regular Bond/Debenture, affirmed A3 Stable

....Senior Senior Unsecured Medium-Term Note Program, affirmed (P)A3

....Senior Unsecured Regular Bond/Debenture, affirmed Baa2 Stable

....Senior Unsecured Medium-Term Note Program, affirmed (P)Baa2

....Senior Unsecured Shelf, affirmed (P)Baa2

....Subordinate Regular Bond/Debenture, affirmed Ba2

....Subordinate Medium-Term Note Program, affirmed (P)Ba2

....Subordinate Shelf, affirmed (P)Ba2

....Other Short-term, affirmed (P)P-2

....Preferred Stock Non-cumulative, affirmed B1(hyb)

....Commercial Paper, affirmed P-2

.Commercial Paper, affirmed Baa2

....Adjusted Baseline Credit Assessment, affirmed ba1

....Baseline Credit Assessment, affirmed ba1

..Outlook Action:

....Outlook remains Stable

Issuer: Deutsche Bank AG, London Branch

..Affirmations:

....Long-term Counterparty Risk Assessment, affirmed A3(cr)

....Short-term Counterparty Risk Assessment, affirmed P-2(cr)

....Senior Senior Unsecured Regular Bond/Debenture, affirmed A3 Stable

....Senior Senior Unsecured Medium-Term Note Program, affirmed (P)A3

....Senior Unsecured Regular Bond/Debenture, affirmed Baa2 Stable

....Senior Unsecured Medium-Term Note Program, affirmed (P)Baa2

....Subordinate Regular Bond/Debenture, affirmed Ba2

....Subordinate Medium-Term Note Program, affirmed (P)Ba2

....Other Short Term, affirmed (P)P-2

..Outlook Action:

....Outlook remains Stable

Issuer: Deutsche Bank AG, New York Branch

..Affirmations:

....Long-term Counterparty Risk Assessment, affirmed A3(cr)

....Short-term Counterparty Risk Assessment, affirmed P-2(cr)

....Long-term Deposit Rating, affirmed A3 Stable

....Short-term Deposit Rating, affirmed P-2

....Senior Unsecured Deposit Note/Takedown, affirmed A3 Stable

..Outlook Action:

....Outlook remains Stable

Issuer: Deutsche Bank AG, Paris Branch

..Affirmations:

....Long-term Counterparty Risk Assessment, affirmed A3(cr)

....Short-term Counterparty Risk Assessment, affirmed P-2(cr)

....Long-term Deposit Ratings, affirmed A3 Stable

....Short-term Deposit Ratings, affirmed P-2

..Outlook Action:

....Outlook remains Stable

Issuer: Deutsche Bank AG, Singapore Branch

..Affirmations:

....Long-term Counterparty Risk Assessment, affirmed A3(cr)

....Short-term Counterparty Risk Assessment, affirmed P-2(cr)

....Other Short-Term, affirmed (P)P-2

....Senior Unsecured Deposit Note/Takedown, affirmed A3 Stable

....Senior Unsecured Regular Bond/Debenture, affirmed Baa2 Stable

....Senior Unsecured Medium-Term Note Program, affirmed (P)Baa2

..Outlook Action:

....Outlook remains Stable

Issuer: Deutsche Bank AG, Sydney Branch

..Affirmations:

....Long-term Counterparty Risk Assessment, affirmed A3(cr)

....Short-term Counterparty Risk Assessment, affirmed P-2(cr)

....Senior Unsecured Regular Bond/Debenture, affirmed Baa2 Stable

....Senior Unsecured Medium-Term Note Program, affirmed (P)Baa2

....Subordinate Medium-Term Note Program, affirmed (P)Ba2

....Other Short Term, affirmed (P)P-2

..Outlook Action:

....Outlook remains Stable

Issuer: Deutsche Bank Capital Finance Trust I

..Affirmation:

....Junior Subordinated Regular Bond/Debenture, affirmed Ba3(hyb)

..Outlook Action:

....No Outlook assigned

Issuer: Deutsche Bank Contingent Capital Trust II

..Affirmation:

....Backed Preferred Stock, affirmed B1(hyb)

..Outlook Action:

....No Outlook assigned

Issuer: Deutsche Bank Contingent Capital Trust III

..Affirmation:

....Backed Preferred Stock, affirmed B1(hyb)

..Outlook Action:

....No Outlook assigned

Issuer: Deutsche Bank Contingent Capital Trust V

..Affirmation:

....Backed Preferred Stock, affirmed B1(hyb)

..Outlook Action:

....No Outlook assigned

Issuer: Deutsche Bank Financial LLC

..Affirmations:

....Backed Senior Unsecured Medium-Term Note Program, affirmed (P)Baa2

....Backed Subordinate Medium-Term Note Program, affirmed (P)Ba2

....Backed Commercial Paper, affirmed P-2

..Outlook Action:

....No Outlook assigned

Issuer: Deutsche Finance (Netherlands) B.V.

..Affirmations:

....Backed Senior Senior Unsecured Regular Bond/Debenture, affirmed A3 Stable

....Backed Senior Unsecured Regular Bond/Debenture, affirmed Baa2 Stable

..Outlook Action:

....No Outlook assigned

PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was Banks published in January 2016. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Peter E. Nerby
Senior Vice President
Financial Institutions Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Robert Young
MD - Financial Institutions
Financial Institutions Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

No Related Data.
© 2019 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

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Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any rating, agreed to pay to Moody’s Investors Service, Inc. for ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and MIS also maintain policies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”

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