DBRS Assigns New Rating to Deutsche Bank Trust Company Americas at “A” UR-Negative

DBRS, Inc. (DBRS) has today assigned new ratings to Deutsche Bank Trust Company Americas (DBTCA or the Company), including a Senior Unsecured Debt & Deposits rating of “A” and a Short-Term Debt & Deposits rating of R-1 (low). At the same time, the long-term rating has been placed Under Review with Negative Implications. The short-term rating has a Stable trend. DBRS has also assigned an intrinsic assessment (IA) of “A” and an SA1 designation to DBTCA.

DBTCA is the principal operating subsidiary of Deutsche Bank Trust Corporation, which is a bank holding company that is wholly owned by Deutsche Bank AG (DB or the Parent). DBTCA is a state-chartered member bank in New York that is FDIC-insured and regulated by the Federal Reserve Bank of New York. Underpinning the IA of “A” is DBTCA’s solid franchise that generates stable, resilient earnings with a low risk profile and very high levels of liquidity and capital. DBTCA’s well-established activities include loan/credit origination and deposit taking for wealth management clients, and transaction banking services for corporates and financial institutions.

The SA1 designation implies strong and predictable support from the Parent. Given the critical importance of DBTCA’s activities as the USD clearing entity for DB, as well as its very high levels of liquidity and capital, DBRS has equalized its rating to that of DB’s. Given the nature of DBTCA’s business activities and strong credit fundamentals, DBRS expects that DBTCA’s ability to make payments would be maintained, even in a time of stress.

DBRS rates DB’s Senior Unsecured Debt & Deposits at “A”. This rating is currently Under Review with Negative Implications given the notable challenges DB faces in improving its internal capital generation ability at a time when its regulatory capital levels have fallen to the lower end of the global peer range. During the review period, DBRS is assessing DB’s earnings and capital position, as well as the execution risks associated with its strategic initiatives and the uncertainty associated with misconduct issues, litigation or weakness in operational controls that could damage DB’s core franchise. DBRS expects to conclude this review in the coming weeks.

RATING DRIVERS
With an SA1 designation, DBTCA’s rating will generally move in tandem with DB’s long-term debt rating, given the interconnectedness of DBTCA with DB. If DBTCA were to become less strategically important to DB, this could result in negative ratings pressure. Furthermore, notable deterioration in DBTCA’s credit fundamentals could also have negative ratings implications.

Notes:
All figures are in USD unless otherwise noted.

The applicable methodologies are Global Methodology for Rating Banks and Banking Organisations (December 2015), DBRS Criteria: Support Assessment for Banks and Banking Organisations (March 2016), DBRS Criteria: Rating Bank Capital Securities – Subordinated, Hybrid, Preferred & Contingent Capital Securities (February 2016) and DBRS Criteria: Critical Obligations Rating (February 2016), which can be found on our website under Methodologies.

The primary sources of information used for this rating include company documents and SNL Financial. DBRS considers the information available to it for the purposes of providing this rating was of satisfactory quality.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.

Lead Analyst: Lisa Kwasnowski
Rating Committee Chair: William Schwartz
Initial Rating Date: 07 June 2016
Most Recent Rating Update: 07 June 2016

The rated entity or its related entities did participate in the rating process. DBRS had access to the accounts and other relevant internal documents of the rated entity or its related entities.

For additional information on this rating, please refer to the linking document under Related Research.