The top US stock index reduced the credit rating of Germany’s largest financial institution from A-

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The top US stock index reduced the credit rating of Germany’s largest financial institution from A- to BBB+, blaming its risky restructuring for the shock move. The downgrade follows news that regulators have shown concern over the bank’s struggling US arm, believed to be weak enough to see it fold entirely. S&P said the downgrade reflects a worry Deutsche Bank’s updated strategy was of a “deeper restructuring” than originally expected and with this comes “non-negligible execution risks”.

The downgrade follows news that regulators have shown concern over the bank’s struggling US arm

The rating agency said: “While we consider management is taking tough, although likely inevitable, actions and proposes a logical strategy to successfully restore the bank to more solid, sustainable profitability over the medium to long term, the bank appears set for a period of sustained underperformance compared with peers, many of whom have now finished restructuring.” S&P officials said they were “broadly supportive” of the bank’s strategy and said “well-performing, more efficient corporate and investment banking division will ultimately support Deutsche Bank’s creditworthiness”. They also said the bank’s major competitors Barclays, Commerzbank, Credit Suisse, and the Royal Bank of Scotland have worked through a similar restructuring strategy and are “already starting to see improved performance”.

When the news broke, the bank’s new CEO Christian Sewing told shareholders: “It won’t do us any harm

On Tuesday, Deutsche Bank suffered another set back after its shares took a nose dive below the all-important ten euro line, trading at €9.92 after falling 3.5 percent, days after their announcement that thousands of jobs in their London and New York offices would be cut. When the news broke, the bank’s new CEO Christian Sewing told shareholders: “It won’t do us any harm to be a bit more boring.” Mr Sewing also said in a statement that although retail banking was still strong “we are not strong enough in other areas of this business”. He said: “Therefore we have to act decisively and to adjust our strategy. There is no time to lose as the current returns for our shareholders are unacceptable.”