- Moody's puts Deutsche Bank's (DB -0.9%) credit ratings on review for upgrade due to its "swift and pronounced progress" in its restructuring undertaken by CEO Christian Sewing.
- The movement toward a "more balanced and sustainable business model" combined with its unchanged "solid capital and liquidity buffers" provides upward pressure to the bank's standalone credit profile, Moody's said.
- The review could give a boost to Deutsche Bank's already investment-grade ratings. The bank's A3/P-2 long- and short-term deposit ratings and long-term senior unsecured debt ratings are under review, as are its Baa3 junior unsecured debt ratings. It's "ba" baseline credit assessment may also be raised.
- Credit ratings are important to corporations because the price of borrowing money declines as credit ratings rise.
- Since announcing the overhaul in summer 2019, Deutsche Bank has provided for almost €7B of restructuring and transformation charges, and €1.8B in loan loss provision, and has reduced capital and leverage exposure consumption and operating costs.
- In addition strong liquidity and reduced dependence on "confidence-sensitive market funding" have allowed it to self-finance the restructuring without a significant impact on key capital ratios, Moody's said.
- Late last month, Deutsche Bank shares after Germany's largest lender posted its strongest quarter in seven years.