Frankfurt am Main (AFP) – Global credit ratings agency S&P said it is mulling a downgrade of Deutsche Bank after the troubled German lender announced a change of CEO.
Christian Sewing was brought in to replace British chief executive John Cryan, who had led the bank since 2016.
While Cryan extricated Deutsche from some of its knottiest legal entanglements following the financial crisis, he did not succeed in guiding the lender back to profitability.
“We are placing our ‘A-‘ long-term issuer credit rating on Deutsche Bank and its core operating subsidiaries on CreditWatch with negative implications as we consider that a prolonged, deepened or more costly restructuring would lead the bank to remain a negative outlier for an extended period,” S&P said in a statement Thursday.
S&P welcomed Sewing’s appointment, saying it could “act as a springboard for the bank to move more rapidly toward a sustainable, solidly profitable business model”.
However, it said the bank “may need to broaden its restructuring effort” beyond changes in its uppermost ranks.
Sewing has promised “further changes” to the structure of the bank in a “difficult market environment” that might see it withdraw from areas where it is not making big enough profits.
Observers will above all be eyeing Sewing’s plans for the investment banking division, which accounts for the biggest chunk of Deutsche’s revenues.
In a statement late Thursday, Deutsche Bank said it respected S&P’s decision, which the ratings agency will revisit in mid-May.
German weekly Wirtschaftswoche on Friday quoted various business leaders as saying they supported Deutsche Bank’s efforts to overcome its woes, with Siemens chief Joe Kaeser saying that “Germany needs a strong bank”.