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Moody's keeps Deutsche Bank's Mexican units under review for downgrade

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Moody's keeps Deutsche Bank's Mexican units under review for downgrade

Moody's on Nov. 22 kept Deutsche Bank México SA Institución de Banca Múltiple and Deutsche Securities SA de CV Casa de Bolsa under review for downgrade pending regulatory approval of the companies' sale to Investa Bank SA Institución de Banca Múltiple.

The review was initiated in November 2016 after Deutsche Bank AG announced an agreement to sell the two Mexican units to Investa Bank. The deal is expected to close in 2017.

Included in the review are the entities' Ba1 long-term global local currency deposit rating as well as their A1.mx long- and MX-1 short-term Mexican national scale issuer ratings. Deutsche Bank México's Ba1 long-term global foreign currency deposit rating, "ba2" baseline credit assessment and Baa3(cr) long- and Prime-3(cr) short-term counterparty risk assessments were also included in the review.

"Until regulatory approval is received, the reviews for downgrade will also consider the impact on the two entities' creditworthiness of the progressive decrease in earnings generation and business diversification that is already occurring as the entities continue to wind down business that will not be part of the sale, and their balance sheets continue to shrink through the transaction's closing date," Moody's said.

According to Investa Bank Chairman Enrique Vilatela, the bank will carry out the final steps of its merger with Deutsche Bank México by the end of 2017 or in the first quarter of next year at the latest.