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Report: Rating agencies pressure Deutsche Bank over restructuring strategy

Rating agencies are putting pressure on Deutsche Bank AG over CEO Christian Sewing's restructuring plan, saying the German lender needs a convincing strategy fast to avoid downgrades, Reuters reported May 14.

S&P Global Ratings, Fitch Ratings and Moody's are awaiting details on the lender's future strategy after it unveiled an overhaul plan in April, especially for its struggling investment banking arm, the report said. Under the restructuring plan, the bank will focus on its European operations, while reducing its commitments to the U.S. and Asia, in which cross-border activity is limited.

Giles Edwards, S&P's lead ratings analyst on Deutsche Bank, told the newswire that chances of a downgrade are "at least 50%," having placed the bank on CreditWatch with negative implications in April.

Moody's also revised the outlook on Deutsche Bank to negative a day after the plan was announced. Peter Nerby, lead analyst for Moody's on Deutsche Bank, reportedly said the bank's ratings may be too high if its goals are deemed not achievable "in any reasonable timeframe."

DBRS also changed the trend on Deutsche Bank's long-term ratings to negative from stable, reflecting the challenges it faces in meeting strategic targets and the need to demonstrate management stability and cohesiveness.

Although Fitch has not taken any action on the lender since downgrading it in September 2017, Christian Scarafia, Fitch's primary analyst on Deutsche Bank, reportedly said then that the downgrade "spoke to what we've then seen developing in the fourth quarter [of 2016] and first quarter of [2017]." He also said in April that the bank's turnaround "has been slow and insufficient," Reuters wrote.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings.