New York, November 19, 2009 -- Moody's Investors Service today placed on review for possible downgrade
the long-term ratings of Deutsche Bank AG (deposits and senior
debt at Aa1, bank financial strength at B), together with
the long-term ratings of most of its subsidiaries. At the
same time, the Prime-1 short-term ratings for the
bank and its rated subsidiaries were affirmed.
"Moody's considers Deutsche Bank to be one of the stronger global
financial institutions and recognizes that the bank has navigated its
way to date through the financial crisis with fewer losses than a number
of its peers," said David Fanger, Moody's Senior
Vice President. The granularity and credit risk mitigation strategies
implemented in its banking book provide resilience to the economic challenges
the bank faces in many of the markets in which it operates. "However,
the counterparty exposures arising from those risk mitigation strategies,
combined with a greater risk appetite in its capital markets activities,
left the bank more exposed to the negative impact the credit crisis had
on financial markets," Mr. Fanger added. In
Moody's opinion Deutsche Bank's credit profile has certain weaknesses
which make the bank less well positioned as a B BFSR-rated financial
institution. These areas, detailed below, will form
the basis of the review:
- Moody's will assess Deutsche Bank's substantial reliance
on capital markets activities and its risk appetite in this business going
forward. It will also consider the bank's strategy for addressing
the higher cost of capital for this business stemming from regulatory
changes for market risk that will be rolled out by the end of 2010.
"We expect further tightening of bid/ask spreads on a range of traded
products to pressure returns in this business segment," Mr.
Fanger noted. "This will pose additional challenges for Deutsche
Bank, since at the same time market and economic conditions have
also led to reduced earnings in several of the bank's other segments."
- Moody's will examine the risks to the bank associated with its
sizable portfolio of illiquid structured assets, including significant
notional exposures to the financial guarantor industry as well as a pool
of reclassified assets consisting largely of failed underwritings and
illiquid structured assets which the bank chose to retain rather than
sell at depressed market values last year. The rating agency believes
that these exposures may still leave Deutsche Bank exposed to potentially
significant additional losses, especially if the financial guarantor
counterparties, most of whom are now rated non-investment
grade, are unable to satisfy their obligations.
- The review will encompass the recalibration of Deutsche Bank's
BFSR in line with the expectation that, as with many other banks
globally, Deutsche Bank will experience increasing deterioration
in asset quality over the coming quarters, which is likely to lead
to greater credit-related write-downs than previously anticipated
in the ratings, and exerting negative pressure on profitability
and capitalization. Further information is available in our Special
Comment published today entitled "Moody's Approach to Estimating German
Banks' Credit Losses" as well as similar Special Comments published on
other countries previously.
- Moody's will also consider each of the above in relation to the
bank's long-term capitalization strategy. Moody's notes
positively that Deutsche Bank has boosted its Tier 1 ratio from 8.6%
at the end of 2007 to 11.7% at the end of September 2009,
although the bank's core Tier 1 ratio has increased more modestly
from 6.9% to 8.1%. However, the
rating agency believes that Deutsche Bank's capital ratios are likely
to face further pressure from pending acquisitions, potential increases
in loan-loss provisions, and a large increase in regulatory
capital requirements for market risk.
SENIOR DEBT RATINGS AND HYBRID CAPITAL INSTRUMENTS
The long-term debt and deposit ratings of Deutsche Bank have included
2 notches of systemic support, given the bank's important role in
the German economy, lifting the B BFSR (which maps to a baseline
credit assessment of Aa3) to the Aa1 senior debt and deposit ratings.
No change is envisaged to the amount of support to be incorporated into
the senior or senior subordinated debt ratings as part of this review.
Moody's does not anticipate the impact of the review on the ratings
for deposits, senior or senior subordinated debt to exceed 1 or
2 notches.
Yesterday, Moody's placed on review for possible downgrade
the ratings on Deutsche Bank's hybrid capital securities.
Those securities are being reviewed in connection with the rating agency's
revised methodology for rating bank hybrid capital securities.
(See "Moody's Guidelines for Rating Bank Hybrid Securities
and Subordinated Debt," released on November 17, 2009.)
The revised methodology removes any ratings benefit due to systemic support
for such instruments -- effectively making the baseline credit assessment
(BCA) the "anchor" rating for notching these instruments.
In addition, the methodology increased the downward notching for
non-cumulative versus cumulative preferred securities. The
review of the hybrid securities will be concluded at the same time as
the review of the rest of Deutsche Bank's long-term ratings.
LAST RATING ACTION
The last rating action on Deutsche Bank was on December 5, 2008
when the outlook on the B BFSR and Aa1 senior debt and deposit ratings
was changed to negative from stable.
The principal methodologies used in rating this issuer were Moody's "Bank
Financial Strength Ratings: Global Methodology," published
in February 2007 and "Incorporation of Joint-Default Analysis into
Moody's Bank Ratings: A Refined Methodology" published in March
2007, available on www.moodys.com in the Rating Methodologies
sub-directory under the Research & Ratings tab. Other
methodologies and factors that may have been considered in the process
of rating this issuer can also be found in the Rating Methodologies sub-directory
on Moody's website.
Deutsche Bank AG, headquartered in Frankfurt, reported total
assets of €1.66 trillion and total equity of €35.7
billion at the end of September 2009.
On Review for Possible Downgrade:
..Issuer: DB UK Bank Limited
....Bank Financial Strength Rating,
Placed on Review for Possible Downgrade, currently C
....Issuer Rating, Placed on Review
for Possible Downgrade, currently Aa3
....Senior Unsecured Deposit Rating,
Placed on Review for Possible Downgrade, currently Aa3
..Issuer: Deutsche Australia Limited
....Senior Unsecured Medium-Term Note
Program, Placed on Review for Possible Downgrade, currently
Aa1
..Issuer: Deutsche Bank AG
....Bank Financial Strength Rating,
Placed on Review for Possible Downgrade, currently B
....Issuer Rating, Placed on Review
for Possible Downgrade, currently Aa1
....Multiple Seniority Medium-Term
Note Program, Placed on Review for Possible Downgrade, currently
Aa2, Aa1
....Subordinate Regular Bond/Debenture,
Placed on Review for Possible Downgrade, currently Aa2
....Senior Unsecured Deposit Program,
Placed on Review for Possible Downgrade, currently Aa1
....Senior Unsecured Deposit Note/Takedown,
Placed on Review for Possible Downgrade, currently Aa1
....Senior Unsecured Commercial Paper,
Placed on Review for Possible Downgrade, currently Aa1
....Senior Unsecured Medium-Term Note
Program, Placed on Review for Possible Downgrade, currently
Aa1
....Senior Unsecured Regular Bond/Debenture,
Placed on Review for Possible Downgrade, currently a range of Aa2
to Aa1
....Senior Unsecured Deposit Rating,
Placed on Review for Possible Downgrade, currently Aa1
..Issuer: Deutsche Bank AG, London Branch
....Multiple Seniority Medium-Term
Note Program, Placed on Review for Possible Downgrade, currently
a range of Aa2 to Aa1
....Subordinate Regular Bond/Debenture,
Placed on Review for Possible Downgrade, currently a range of Aa2
to Aa1
....Senior Unsecured Conv./Exch.
Bond/Debenture, Placed on Review for Possible Downgrade, currently
Aa1
....Senior Unsecured Medium-Term Note
Program, Placed on Review for Possible Downgrade, currently
Aa1
....Senior Unsecured Regular Bond/Debenture,
Placed on Review for Possible Downgrade, currently Aa1
..Issuer: Deutsche Bank AG, New York Branch
....Senior Unsecured Deposit Note/Takedown,
Placed on Review for Possible Downgrade, currently Aa1
....Senior Unsecured Deposit Rating,
Placed on Review for Possible Downgrade, currently Aa1
..Issuer: Deutsche Bank AG, New Zealand
....Subordinate Regular Bond/Debenture,
Placed on Review for Possible Downgrade, currently Aa2
..Issuer: Deutsche Bank AG, Paris Branch
....Senior Unsecured Deposit Rating,
Placed on Review for Possible Downgrade, currently Aa1
..Issuer: Deutsche Bank AG, Singapore Branch
....Senior Unsecured Deposit Program,
Placed on Review for Possible Downgrade, currently Aa1
....Senior Unsecured Deposit Note/Takedown,
Placed on Review for Possible Downgrade, currently Aa1
..Issuer: Deutsche Bank AG, Sydney Branch
....Multiple Seniority Medium-Term
Note Program, Placed on Review for Possible Downgrade, currently
Aa2, Aa1
....Senior Unsecured Deposit Program,
Placed on Review for Possible Downgrade, currently Aa1
....Senior Unsecured Deposit Note/Takedown,
Placed on Review for Possible Downgrade, currently Aa1
....Senior Unsecured Medium-Term Note
Program, Placed on Review for Possible Downgrade, currently
Aa1
....Senior Unsecured Regular Bond/Debenture,
Placed on Review for Possible Downgrade, currently Aa1
..Issuer: Deutsche Bank Americas Finance LLC
....Senior Unsecured Medium-Term Note
Program, Placed on Review for Possible Downgrade, currently
Aa1
..Issuer: Deutsche Bank Capital Finance Trust I
....Junior Subordinated Regular Bond/Debenture,
Placed on Review for Possible Downgrade, currently Aa3
..Issuer: Deutsche Bank Capital Funding Trust I
....Preferred Stock Preferred Stock,
Placed on Review for Possible Downgrade, currently Aa3
..Issuer: Deutsche Bank Capital Funding Trust IV
....Preferred Stock Preferred Stock,
Placed on Review for Possible Downgrade, currently Aa3
..Issuer: Deutsche Bank Capital Funding Trust IX
....Preferred Stock Preferred Stock,
Placed on Review for Possible Downgrade, currently Aa3
..Issuer: Deutsche Bank Capital Funding Trust V
....Preferred Stock Preferred Stock,
Placed on Review for Possible Downgrade, currently Aa3
..Issuer: Deutsche Bank Capital Funding Trust VI
....Preferred Stock Preferred Stock,
Placed on Review for Possible Downgrade, currently Aa3
..Issuer: Deutsche Bank Capital Funding Trust VII
....Preferred Stock Preferred Stock,
Placed on Review for Possible Downgrade, currently Aa3
..Issuer: Deutsche Bank Capital Funding Trust VIII
....Preferred Stock Preferred Stock,
Placed on Review for Possible Downgrade, currently Aa3
..Issuer: Deutsche Bank Capital Funding Trust X
....Preferred Stock Preferred Stock,
Placed on Review for Possible Downgrade, currently Aa3
..Issuer: Deutsche Bank Capital Funding Trust XI
....Preferred Stock Preferred Stock,
Placed on Review for Possible Downgrade, currently Aa3
..Issuer: Deutsche Bank Capital Trust III
....Preferred Stock Preferred Stock,
Placed on Review for Possible Downgrade, currently Aa3
..Issuer: Deutsche Bank Capital Trust V
....Preferred Stock Preferred Stock,
Placed on Review for Possible Downgrade, currently Aa3
..Issuer: Deutsche Bank Contingent Capital Trust II
....Preferred Stock Preferred Stock,
Placed on Review for Possible Downgrade, currently Aa3
..Issuer: Deutsche Bank Contingent Capital Trust III
....Preferred Stock Preferred Stock,
Placed on Review for Possible Downgrade, currently Aa3
..Issuer: Deutsche Bank Contingent Capital Trust V
....Preferred Stock Preferred Stock,
Placed on Review for Possible Downgrade, currently Aa3
..Issuer: Deutsche Bank Finance N.V.
....Multiple Seniority Medium-Term
Note Program, Placed on Review for Possible Downgrade, currently
Aa2, Aa1
....Senior Unsecured Regular Bond/Debenture,
Placed on Review for Possible Downgrade, currently Aa1
..Issuer: Deutsche Bank Financial Inc.
....Senior Unsecured Medium-Term Note
Program, Placed on Review for Possible Downgrade, currently
Aa1
....Senior Unsecured Regular Bond/Debenture,
Placed on Review for Possible Downgrade, currently Aa1
..Issuer: Deutsche Bank Financial LLC
....Subordinate Medium-Term Note Program,
Placed on Review for Possible Downgrade, currently Aa2
....Subordinate Regular Bond/Debenture,
Placed on Review for Possible Downgrade, currently Aa2
....Senior Unsecured Medium-Term Note
Program, Placed on Review for Possible Downgrade, currently
Aa1
..Issuer: Deutsche Bank National Trust Company
....Bank Financial Strength Rating,
Placed on Review for Possible Downgrade, currently C
....Issuer Rating, Placed on Review
for Possible Downgrade, currently Aa3
....OSO Senior Unsecured OSO Rating,
Placed on Review for Possible Downgrade, currently Aa3
....Senior Unsecured Deposit Rating,
Placed on Review for Possible Downgrade, currently Aa3
..Issuer: Deutsche Bank Securities Inc
....Multiple Seniority Medium-Term
Note Program, Placed on Review for Possible Downgrade, currently
A1, Aa3
..Issuer: Deutsche Bank Trust Company Americas
....Bank Financial Strength Rating,
Placed on Review for Possible Downgrade, currently C
....Issuer Rating, Placed on Review
for Possible Downgrade, currently Aa3
....OSO Senior Unsecured OSO Rating,
Placed on Review for Possible Downgrade, currently Aa3
....Multiple Seniority Medium-Term
Note Program, Placed on Review for Possible Downgrade, currently
A1, Aa3
....Senior Unsecured Deposit Rating,
Placed on Review for Possible Downgrade, currently Aa3
..Issuer: Deutsche Bank Trust Company Delaware
....Bank Financial Strength Rating,
Placed on Review for Possible Downgrade, currently C
....Issuer Rating, Placed on Review
for Possible Downgrade, currently Aa3
....OSO Senior Unsecured OSO Rating,
Placed on Review for Possible Downgrade, currently Aa3
....Senior Unsecured Deposit Rating,
Placed on Review for Possible Downgrade, currently Aa3
..Issuer: Deutsche Bank Trust Corporation
....Issuer Rating, Placed on Review
for Possible Downgrade, currently A1
....Multiple Seniority Medium-Term
Note Program, Placed on Review for Possible Downgrade, currently
a range of A2 to A1
....Multiple Seniority Shelf, Placed
on Review for Possible Downgrade, currently a range of (P)A3 to
(P)A1
....Subordinate Conv./Exch.
Bond/Debenture, Placed on Review for Possible Downgrade, currently
A2
....Subordinate Regular Bond/Debenture,
Placed on Review for Possible Downgrade, currently A2
..Issuer: Deutsche Finance (Netherlands) B.V.
....Senior Unsecured Conv./Exch.
Bond/Debenture, Placed on Review for Possible Downgrade, currently
Aa1
....Senior Unsecured Regular Bond/Debenture,
Placed on Review for Possible Downgrade, currently Aa1
Outlook Actions:
..Issuer: DB UK Bank Limited
....Outlook, Changed To Rating Under
Review From Negative
..Issuer: Deutsche Australia Limited
....Outlook, Changed To Rating Under
Review From Negative
..Issuer: Deutsche Bank AG
....Outlook, Changed To Rating Under
Review From Negative
..Issuer: Deutsche Bank AG, London Branch
....Outlook, Changed To Rating Under
Review From Negative
..Issuer: Deutsche Bank AG, New York Branch
....Outlook, Changed To Rating Under
Review From Negative
..Issuer: Deutsche Bank AG, New Zealand
....Outlook, Changed To Rating Under
Review From Negative
..Issuer: Deutsche Bank AG, Paris Branch
....Outlook, Changed To Rating Under
Review From Negative
..Issuer: Deutsche Bank AG, Singapore Branch
....Outlook, Changed To Rating Under
Review From Negative
..Issuer: Deutsche Bank AG, Sydney Branch
....Outlook, Changed To Rating Under
Review From Negative
..Issuer: Deutsche Bank Americas Finance LLC
....Outlook, Changed To Rating Under
Review From Negative
..Issuer: Deutsche Bank Capital Finance Trust I
....Outlook, Changed To Rating Under
Review From Negative
..Issuer: Deutsche Bank Capital Funding Trust I
....Outlook, Changed To Rating Under
Review From Negative
..Issuer: Deutsche Bank Capital Funding Trust IV
....Outlook, Changed To Rating Under
Review From Negative
..Issuer: Deutsche Bank Capital Funding Trust IX
....Outlook, Changed To Rating Under
Review From Negative
..Issuer: Deutsche Bank Capital Funding Trust V
....Outlook, Changed To Rating Under
Review From Negative
..Issuer: Deutsche Bank Capital Funding Trust VI
....Outlook, Changed To Rating Under
Review From Negative
..Issuer: Deutsche Bank Capital Funding Trust VII
....Outlook, Changed To Rating Under
Review From Negative
..Issuer: Deutsche Bank Capital Funding Trust VIII
....Outlook, Changed To Rating Under
Review From Negative
..Issuer: Deutsche Bank Capital Funding Trust X
....Outlook, Changed To Rating Under
Review From Negative
..Issuer: Deutsche Bank Capital Funding Trust XI
....Outlook, Changed To Rating Under
Review From Negative
..Issuer: Deutsche Bank Capital Trust III
....Outlook, Changed To Rating Under
Review From Negative
..Issuer: Deutsche Bank Capital Trust V
....Outlook, Changed To Rating Under
Review From Negative
..Issuer: Deutsche Bank Contingent Capital Trust II
....Outlook, Changed To Rating Under
Review From Negative
..Issuer: Deutsche Bank Contingent Capital Trust III
....Outlook, Changed To Rating Under
Review From Negative
..Issuer: Deutsche Bank Contingent Capital Trust V
....Outlook, Changed To Rating Under
Review From Negative
..Issuer: Deutsche Bank Finance N.V.
....Outlook, Changed To Rating Under
Review From Negative
..Issuer: Deutsche Bank Financial Inc.
....Outlook, Changed To Rating Under
Review From Negative
..Issuer: Deutsche Bank Financial LLC
....Outlook, Changed To Rating Under
Review From Negative
..Issuer: Deutsche Bank National Trust Company
....Outlook, Changed To Rating Under
Review From Negative
..Issuer: Deutsche Bank Securities Inc
....Outlook, Changed To Rating Under
Review From Negative
..Issuer: Deutsche Bank Trust Company Americas
....Outlook, Changed To Rating Under
Review From Negative
..Issuer: Deutsche Bank Trust Company Delaware
....Outlook, Changed To Rating Under
Review From Negative
..Issuer: Deutsche Bank Trust Corporation
....Outlook, Changed To Rating Under
Review From Negative
..Issuer: Deutsche Finance (Netherlands) B.V.
....Outlook, Changed To Rating Under
Review From Negative
New York
David Fanger
Managing Director
Financial Institutions Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
London
Johannes Wassenberg
Managing Director
Financial Institutions Group
Moody's Investors Service Ltd.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Moody's reviews Deutsche Bank ratings for downgrade (snr Aa1)
