Moody's on Oct. 9 downgraded Debeka Bausparkasse AG's baseline and adjusted baseline credit assessments to "baa3" from "baa2."

The rating agency also downgraded the German bank's long- and short-term counterparty risk assessments to A3(cr)/P-2(cr) from A2(cr)/P-1(cr). At the same time, Moody's affirmed the lender's Baa2/P-2 long- and short-term bank deposit ratings and A3/P-2 long- and short-term counterparty risk ratings.

The outlook on the long-term bank deposit rating remains negative.

Moody's said the downgrade of Debeka Bausparkasse's baseline credit assessment balances the offsetting effects of the current deterioration in the bank's intrinsic profitability and hence pressure on its capital, as well as a capital measure from the lender's parent company, Debeka Krankenversicherungsverein AG, that the agency expects to be concluded shortly.

The downgrade of the bank's counterparty risk assessments reflect the downgrade of its baseline credit assessment.

Meanwhile, the negative outlook mirrors Moody's assessment that Debeka Bausparkasse has yet to prove it can implement sufficient adjustments to its product pricing, operational set-up and internal structures, despite expectations the bank will most likely manage its capital resources adequately during the prolonged period of stress on profit.