Industry-wide regulatory developments dominated the actions of rating agencies

In March and April 2014, Fitch Ratings and Standard & Poors revised the outlook of their long-term ratings for Deutsche Bank from “stable” to “negative” as part of their industry-wide reviews of assumptions of government support in the European banking sector. Both agencies were responding to the ongoing developments of the European Union’s Bank Recovery and Resolution Directive, which aims to further safeguard the stability of the financial services industry. A major objective of this Directive, for example, is to shift the burden of losses away from taxpayers to shareholders and creditors.

In July 2014, Moody’s lowered Deutsche Bank’s long-term, standalone and short-term ratings by one notch, to A3, baa3 and P-2, respectively. The outlook on Deutsche Bank’s standalone rating is now stable, while the outlook on the long-term rating remains negative. Similar to Standard & Poors and Fitch Ratings, Moody’s negative outlook reflects its view of a trend towards generally lower systemic support for European Union banks.

On February 3, 2015, Standard & Poor’s placed Deutsche Bank’s long-term rating on “Credit Watch Negative” as part of its review of German, Austrian and UK banks to reflect the implementation of bail-in rules into legislation in these three countries as of January 1, 2015. The rating agency expects to resolve the Credit Watch placement by early May 2015.

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