New York, March 21, 2016 -- Moody's Investors Service has placed on review for possible downgrade
the ratings of Deutsche Bank AG ("Deutsche Bank") and affiliates,
including the bank's long-term deposit rating of A2, its
senior unsecured debt rating of Baa1, its standalone baseline credit
assessment ("BCA") of baa3, its counterparty risk assessment
of A2(cr), as well as its short term ratings and short term counterparty
risk assessment of Prime-1 and Prime-1(cr), respectively.
Also placed on review for downgrade were the long-term ratings
of US- based Deutsche Bank Trust Corporation and its trust company
affiliates, considering the close linkages of the franchise value
of these operations to those of the parent Deutsche Bank. Principal
ratings affected include the long-term deposit ratings of A1,
issuer ratings of Baa1, the standalone baseline credit assessments
of a3, and the counterparty risk assessments of A2(cr) and Prime-1(cr).
The Prime-1 short-term deposit ratings of the trust companies
were affirmed.
For Deutsche Bank's subsidiary Deutsche Postbank AG, Moody's
placed the entity's main ratings on review for downgrade,
with the exception of the bank's ba1 BCA which was unaffected by
today's rating action. The Postbank ratings placed on review
for downgrade include the bank's A2 long-term deposits ratings,
its (P)Baa1 senior unsecured programme rating, the bank's
Prime-1 short-term debt and deposits ratings and the A2(cr)/P-1(cr)
counterparty risk assessment. Each of these ratings benefit from
one notch of affiliate support, based on the BCA of Deutsche Bank.
See below for a complete list of affected ratings.
RATINGS RATIONALE
The review for downgrade is prompted by the rising execution hurdles facing
Deutsche Bank in its efforts to strengthen and stabilize profitability
over the next three years. The firm recently indicated weak performance
within its capital markets operations in the first two months of 2016
(typically the strongest quarter in the year for this business),
and this follows on a weak fourth quarter 2015 performance. "Deutsche
Bank's diminished performance in the most recent two periods is
a function of both environmental and firm-specific factors"
said Peter Nerby, a Moody's Senior Vice-President.
Since changing leadership last June and recalibrating its strategic plan
last November, the operating environment has worsened for Deutsche
Bank. This is increasing the already high level of execution challenges
the group faces in addressing its structural cost issues and achieving
its new strategic plan. Moody's forecasts that revenue and
expense headwinds may delay an improvement in profitability and achievement
of Deutsche Bank's interim cost-to-income targets
(principally a cost-to-income ratio of approximately 70%)
for 2018. The scale of the firm's reengineering task,
the potential for further weak revenue, and the risk of incremental
litigation charges also create uncertainty, further increasing the
execution challenge.
Despite the near-term earnings challenges, the firm's
overall solvency and liquidity profiles support its creditworthiness and
provide the firm time and flexibility to adjust the plan as conditions
warrant. Deutsche Bank's solvency is supported by a solid
overall capital and litigation reserve position, as well as its
asset risk profile. Deutsche Bank also maintains a strong liquidity
profile. As such, Moody's expects that should there
be a downgrade of Deutsche Bank's Baa1 senior debt and A2 deposit
ratings, it would be limited to one notch.
Furthermore, the ultimate objectives of the new strategic plan are
credit positive. The business mix of the bank will be tilted away
from more volatile and capital-intensive capital markets activities,
with a greater emphasis on more stable, annuity franchises,
including transaction banking and asset and wealth management.
As a result, Deutsche Bank is committed to having a simpler and
more stable business mix, operating with lower leverage and targeting
a more conservative return-on-equity. However it
is not clear whether the revenue attrition from shrinking the balance
sheet and streamlining the client base can be quickly offset by growth
in new areas.
The review will focus on the details of the execution plan for 2016 and
2017, in particular, and the extent to which it will have
to be adapted given challenges in the operating environment. The
review also will focus on details and timing of the plan to renew the
technological platform of the bank, a key enabler of future revenues
and cost efficiencies.
Moody's will also review Deutsche Bank's Additional Tier 1 securities
(Ba3) to evaluate whether its execution challenges increase the risk of
a coupon deferral on them. This could warrant additional,
wider notching for these securities and result in up to a two notch downgrade
for these securities.
List of Affected Ratings -
On Review for Downgrade:
..Issuer: Deutsche Bank AG
....Adjusted Baseline Credit Assessment,
Placed on Review for Downgrade, currently baa3
....Baseline Credit Assessment, Placed
on Review for Downgrade, currently baa3
....Long Term Counterparty Risk Assessment,
Placed on Review for Downgrade, currently A2(cr)
....Short Term Counterparty Risk Assessment,
Placed on Review for Downgrade, currently P-1(cr)
....Long Term Bank Deposit Rating, Placed
on Review for Downgrade, currently A2
....Short Term Bank Deposit Rating,
Placed on Review for Downgrade, currently P-1
....Issuer Rating, Placed on Review
for Downgrade, currently Baa1
....Senior Unsecured Regular Bond/Debenture,
Placed on Review for Downgrade, currently Baa1
....Subordinate Regular Bond/Debenture,
Placed on Review for Downgrade, currently Ba1
....Preferred Stock Non-cumulative,
Placed on Review for Downgrade, currently Ba3(hyb)
....Commercial Paper, Placed on Review
for Downgrade, currently P-1
....Senior Unsecured Shelf, Placed on
Review for Downgrade, currently (P)Baa1
....Subordinate Shelf, Placed on Review
for Downgrade, currently (P)Ba1
....Senior Unsecured Medium-Term Note
Program, Placed on Review for Downgrade, currently (P)Baa1
....Subordinate Medium-Term Note Program,
Placed on Review for Downgrade, currently (P)Ba1
....Short Term Medium-Term Note Program,
Placed on Review for Downgrade, currently (P)P-1
..Issuer: Deutsche Bank AG, London Branch
....Long Term Counterparty Risk Assessment,
Placed on Review for Downgrade, currently A2(cr)
....Short Term Counterparty Risk Assessment,
Placed on Review for Downgrade, currently P-1(cr)
....Senior Unsecured Regular Bond/Debenture,
Placed on Review for Downgrade, currently Baa1
....Subordinate Regular Bond/Debenture,
Placed on Review for Downgrade, currently Ba1
....Senior Unsecured Shelf, Placed on
Review for Downgrade, currently (P)Baa1
....Subordinate Shelf, Placed on Review
for Downgrade, currently (P)Ba1
....Senior Unsecured Medium-Term Note
Program, Placed on Review for Downgrade, currently (P)Baa1
....Subordinate Medium-Term Note Program,
Placed on Review for Downgrade, currently (P)Ba1
....Short Term Medium-Term Note Program,
Placed on Review for Downgrade, currently (P)P-1
..Issuer: Deutsche Bank AG, New York Branch
....Long Term Counterparty Risk Assessment,
Placed on Review for Downgrade, currently A2(cr)
....Short Term Counterparty Risk Assessment,
Placed on Review for Downgrade, currently P-1(cr)
....Long Term Bank Deposit Rating, Placed
on Review for Downgrade, currently A2
....Short Term Bank Deposit Rating,
Placed on Review for Downgrade, currently P-1
....Senior Unsecured Deposit Note/Takedown,
Placed on Review for Downgrade, currently A2
..Issuer: Deutsche Bank AG, Paris Branch
....Long Term Counterparty Risk Assessment,
Placed on Review for Downgrade, currently A2(cr)
....Short Term Counterparty Risk Assessment,
Placed on Review for Downgrade, currently P-1(cr)
....Long Term Bank Deposit Rating, Placed
on Review for Downgrade, currently A2
....Short Term Bank Deposit Rating,
Placed on Review for Downgrade, currently P-1
..Issuer: Deutsche Bank AG, Singapore Branch
....Long Term Counterparty Risk Assessment,
Placed on Review for Downgrade, currently A2(cr)
....Short Term Counterparty Risk Assessment,
Placed on Review for Downgrade, currently P-1(cr)
....Senior Unsecured Deposit Note/Takedown,
Placed on Review for Downgrade, currently A2
....Senior Unsecured Medium-Term Note
Program, Placed on Review for Downgrade, currently (P)Baa1
....Short Term Medium-Term Note Program,
Placed on Review for Downgrade, currently (P)P-1
..Issuer: Deutsche Bank AG, Sydney Branch
....Long Term Counterparty Risk Assessment,
Placed on Review for Downgrade, currently A2(cr)
....Short Term Counterparty Risk Assessment,
Placed on Review for Downgrade, currently P-1(cr)
....Senior Unsecured Regular Bond/Debenture,
Placed on Review for Downgrade, currently Baa1
....Senior Unsecured Medium-Term Note
Program, Placed on Review for Downgrade, currently (P)Baa1
....Subordinate Medium-Term Note Program,
Placed on Review for Downgrade, currently (P)Ba1
....Short Term Medium-Term Note Program,
Placed on Review for Downgrade, currently (P)P-1
..Issuer: Deutsche Bank Capital Finance Trust I
....Junior Subordinated Regular Bond/Debenture,
Placed on Review for Downgrade, currently Ba2(hyb)
..Issuer: Deutsche Bank Contingent Capital Trust II
....Backed Preferred Stock, Placed on
Review for Downgrade, currently Ba3(hyb)
..Issuer: Deutsche Bank Contingent Capital Trust III
....Backed Preferred Stock, Placed on
Review for Downgrade, currently Ba3(hyb)
..Issuer: Deutsche Bank Contingent Capital Trust V
....Backed Preferred Stock, Placed on
Review for Downgrade, currently Ba3(hyb)
..Issuer: Deutsche Bank Financial LLC
....Backed Commercial Paper, Placed
on Review for Downgrade, currently P-1
....Backed Senior Unsecured Medium-Term
Note Program, Placed on Review for Downgrade, currently (P)Baa1
....Backed Subordinate Medium-Term
Note Program, Placed on Review for Downgrade, currently (P)Ba1
..Issuer: Deutsche Bank National Trust Company
....Adjusted Baseline Credit Assessment,
Placed on Review for Downgrade, currently a3
....Baseline Credit Assessment, Placed
on Review for Downgrade, currently a3
....Long Term Counterparty Risk Assessment,
Placed on Review for Downgrade, currently A2(cr)
....Short Term Counterparty Risk Assessment,
Placed on Review for Downgrade, currently P-1(cr)
....Long Term Bank Deposit Rating, Placed
on Review for Downgrade, currently A1
....Issuer Rating, Placed on Review
for Downgrade, currently Baa1
..Issuer: Deutsche Bank Trust Company Americas
....Adjusted Baseline Credit Assessment,
Placed on Review for Downgrade, currently a3
....Baseline Credit Assessment, Placed
on Review for Downgrade, currently a3
....Long Term Counterparty Risk Assessment,
Placed on Review for Downgrade, currently A2(cr)
....Short Term Counterparty Risk Assessment,
Placed on Review for Downgrade, currently P-1(cr)
....Long Term Bank Deposit Rating, Placed
on Review for Downgrade, currently A1
....Issuer Rating, Placed on Review
for Downgrade, currently Baa1
..Issuer: Deutsche Bank Trust Company Delaware
....Adjusted Baseline Credit Assessment,
Placed on Review for Downgrade, currently a3
....Baseline Credit Assessment, Placed
on Review for Downgrade, currently a3
....Long Term Counterparty Risk Assessment,
Placed on Review for Downgrade, currently A2(cr)
....Short Term Counterparty Risk Assessment,
Placed on Review for Downgrade, currently P-1(cr)
....Long Term Bank Deposit Rating, Placed
on Review for Downgrade, currently A1
....Issuer Rating, Placed on Review
for Downgrade, currently Baa1
..Issuer: Deutsche Bank Trust Corporation
....Issuer Rating, Placed on Review
for Downgrade, currently Baa1
..Issuer: Deutsche Finance (Netherlands) B.V.
....Backed Senior Unsecured Regular Bond/Debenture,
Placed on Review for Downgrade, currently Baa1
..Issuer: Deutsche Postbank AG
....Adjusted Baseline Credit Assessment,
Placed on Review for Downgrade, currently baa3
....Long-Term Counterparty Risk Assessment,
Placed on Review for Downgrade, currently A2(cr)
....Short-Term Counterparty Risk Assessment,
Placed on Review for Downgrade, currently P-1(cr)
....Long Term Bank Deposit Rating, Placed
on Review for Downgrade, currently A2
....Short-Term Bank Deposit Rating,
Placed on Review for Downgrade, currently P-1
....Subordinate Regular Bond/Debenture,
Placed on Review for Downgrade, currently Ba1
....Deposit Note/CD Program, Placed
on Review for Downgrade, currently P-1
....Commercial Paper, Placed on Review
for Downgrade, currently P-1
....Senior Unsecured Medium-Term Note
Program, Placed on Review for Downgrade, currently (P)Baa1
....Subordinated Medium-Term Note Program,
Placed on Review for Downgrade, currently (P)Ba1
....Short Term Medium-Term Note Program,
Placed on Review for Downgrade, currently (P)P-1
..Issuer: Deutsche Postbank Funding Trust I
....Preferred Stock Non-Cumulative,
Placed on Review for Downgrade, currently Ba3(hyb)
..Issuer: Deutsche Postbank Funding Trust II
....Preferred Stock Non-Cumulative,
Placed on Review for Downgrade, currently Ba3(hyb)
..Issuer: Deutsche Postbank Funding Trust III
....Preferred Stock Non-Cumulative,
Placed on Review for Downgrade, currently Ba3(hyb)
..Issuer: Deutsche Postbank Funding Trust IV
....Preferred Stock Non-Cumulative,
Placed on Review for Downgrade, currently Ba3(hyb)
..Issuer: ProSecure Funding Limited Partnership
....Backed Junior Subordinated Regular Bond/Debenture,
Placed on Review for Downgrade, currently Ba2(hyb)
Affirmations:
..Issuer: Deutsche Bank National Trust Company
....Short Term Bank Deposit Rating,
Affirmed P-1
..Issuer: Deutsche Bank Trust Company Americas
....Short Term Bank Deposit Rating,
Affirmed P-1
..Issuer: Deutsche Bank Trust Company Delaware
....Short Term Bank Deposit Rating,
Affirmed P-1
Not Affected:
..Issuer: Deutsche Postbank AG
....Baseline Credit Assessment, currently
ba1
Outlook Actions:
..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, 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 Capital Finance Trust I
....Outlook, Changed To Rating Under
Review From NOO
..Issuer: Deutsche Bank Contingent Capital Trust II
....Outlook, Changed To Rating Under
Review From NOO
..Issuer: Deutsche Bank Contingent Capital Trust III
....Outlook, Changed To Rating Under
Review From NOO
..Issuer: Deutsche Bank Contingent Capital Trust V
....Outlook, Changed To Rating Under
Review From NOO
..Issuer: Deutsche Bank Finance LLC
....Outlook, Changed To Rating Under
Review From NOO
..Issuer: Deutsche Bank National Trust Company
....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 NOO
..Issuer: Deutsche Postbank AG
....Outlook, Changed To Rating Under
Review From Negative
..Issuer: Deutsche Postbank Funding Trust I
....Outlook, Changed To Rating Under
Review From NOO
..Issuer: Deutsche Postbank Funding Trust II
....Outlook, Changed To Rating Under
Review From NOO
..Issuer: Deutsche Postbank Funding Trust III
....Outlook, Changed To Rating Under
Review From NOO
..Issuer: Deutsche Postbank Funding Trust IV
....Outlook, Changed To Rating Under
Review From NOO
..Issuer: ProSecure Funding Limited Partnership
....Outlook, Changed To Rating Under
Review From NOO
The principal methodology used in these ratings was Banks published in
January 2016. Please see the Ratings 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.
The ratings of rated entities Deutsche Postbank AG, Deutsche Postbank
Funding Trust I, Deutsche Postbank Funding Trust II, Deutsche
Postbank Funding Trust III, Deutsche Postbank Funding Trust IV and
ProSecure Funding Limited Partnership were not initiated or not maintained
at the request of these rated entities.
Moody's considers a rated entity or its agent(s) to be participating
when it maintains an overall relationship with Moody's. On
this basis, Deutsche Postbank AG, Deutsche Postbank Funding
Trust I, Deutsche Postbank Funding Trust II, Deutsche Postbank
Funding Trust III, Deutsche Postbank Funding Trust IV, ProSecure
Funding Limited Partnership or their agents are considered to be non-participating
entities. These rated entities or their agents generally do not
provide Moody's with information for the purposes of their ratings
process.
The relevant office for each credit rating is identified in "Debt/deal
box" on the Ratings tab in the Debt/Deal List section of each issuer/entity
page of the Website.
The below contact information is provided for information purposes only.
Please see the ratings tab of the issuer page at www.moodys.com,
for each of the ratings covered, Moody's disclosures on the
lead analyst and the Moody's legal entity that has issued the ratings.
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
Moody's reviews for downgrade Deutsche Bank's ratings (senior debt at Baa1)
