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
