S&P reaffirms Deutsche Bank´s long-term credit rating

Standard&Poor´s gave Deutsche Bank a vote of confidence, emphasising that the lender had the financial wherewithal to absorb the likely amount of the fines which the US Department of Justice was expected to hand down.

S&P thus kept the bank´s long-term debt rating at BBB+.

Nonetheless, the lender still had to demonstrate a clearer path to peer-equivalent profitability and to build-up its stand-alone creditworthiness, according to the ratings agency; hence it also kept its 'negative' outlook on that rating.

The analysts also said they expected Deutsche Bank to take a bigger hit from the DoJ related to the civil claims over its role in selling residential mortgage backed securities in the run-up to the last financial crisis than it reported in June 2016.

On that date, Deutsche Bank reported provisions for litigation charges of €5.5bn and a €1.7bn contingent liability.

"We remain of the view that Deutsche Bank's main challenge is the restructuring of its business model to achieve stronger earnings and capital, and we believe recent market volatility surrounding the bank may complicate the achievement of this goal.

"The negative outlook reflects the possibility that we may downgrade Deutsche Bank if it is unable to demonstrate a clearer path to peer-equivalent profitability and stronger stand-alone creditworthiness."

Shares in the lender finished 1.61% higher at €12.32.