Deutsche bank shares rise despite S&P downgrade

on Jun 1, 2018

Deutsche Bank shares are trading higher Friday, following a weak performance Thursday and news that Standard & Poor’s ratings agency has downgraded its long-term view of the bank.

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The downgrade comes a day after it was revealed the US Federal Reserve considered the Bank’s US unit to be in “troubled condition”.

By around midday, Deutsche Bank shares were 3.83% higher at €9.51. That follows a slump of over 80 cents, Thursday.

Deutsche Bank’s S&P downgrade

S&P has downgraded Deutsche Bank’s long-term outlook one notch from A- to BBB+, it said in a press release early Friday.

The ratings agency’s move comes after firmer details of the German bank’s restructure under new CEO, Christian Sewing, were revealed earlier this month.

“We consider that management is taking tough actions to cut the cost base and refocus the business in order to address the bank's currently weak profitability” S&P of its decision.

“However, we see significant execution risks in the delivery of the updated strategy amid a continued unhelpful market backdrop, and we think that, relative to peers, Deutsche Bank will remain a negative outlier for some time,” the ratings agency added.

Deutsche Bank’s Sewing moves to reassure amid negative news flow

Earlier Friday, Deutsche Bank published a brief response statement to the downgrade.

“We appreciate S&Ps statement that ‘management is taking tough actions to cut the cost base and refocus the business in order to address the bank’s current weak profitability.’ We note that Deutsche Bank’s non-preferred senior unsecured debt rating of BBB- is reaffirmed,” the Bank said.

However, CEO Sewing also published a separate press release detailing the negative news flow. It’s also likely to be seen as offering some reassurance to employees, the board and investors.

“My dear colleagues, the last few years were tough. Many of you are sick and tired of bad news. That’s exactly how I feel,” Sewing said.

“But there’s no reason for us to be discouraged. Yes, our share price is at a historic low. But we’ll prove that we have earned a better valuation on the financial markets. We’ve achieved a lot we can be proud of…. Now we need to look forward,” Sewing added.


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