Deutsche Bank Is Sick but Not at Death's Door

The Fed is Deutsche Bank’s main regulator in the US

The Fed is Deutsche Bank’s main regulator in the US

USA regulators in March warned Europe's biggest investment bank it must act more urgently to fix lapses described in a series of settlements with the Federal Reserve over the past few years, Bloomberg reported in May.

News of the Fed's judgment, handed down past year but only made public now, was followed by a move from the leading ratings agency Standard & Poor's to downgrade Deutsche's long-term credit rating.

He noted that the ratings agency predicts the bank will eventually return to steady profits and that its outlook was rated as "stable", meaning further downgrades are not envisioned.

S&P had rated Deutsche Bank's long-term credit at A-, on negative credit watch.

"We have made progress in remediating them over the past year", he wrote.

This followed a report on Thursday in the Wall Street Journal that the US Federal Reserve viewed the lender as troubled a year ago, and on Friday Standard & Poor's downgraded Deutsche's credit rating from A- to BBB+.

As a result of the Fed downgrade, the bank has had to seek approval from the feds on hiring, firing and even employee transfers. We're not yet where we want to be, but we're steadily getting there. A spokesperson for the bank said in a statement to the Journal: "We have previously indicated that our regulators have identified various areas for improvement relating to our control environment and infrastructure".

Another lurch downward in its stock price to a record low Thursday smacks of panic among investors.

"The bank now has a tighter management team, good capital and liquidity, and supervisors are reassured by the plans they see", a source familiar with the thinking of the European Central Bank said. That was one or two notches below most major European competitors.

The Federal Deposit Insurance Corp. has added Deutsche Bank's federally insured USA business to a list of banks with weaknesses serious enough to endanger their financial viability, the person said Thursday, confirming reports by the Financial Times and The Wall Street Journal.

The chief executive also said Deutsche Bank was well positioned to react to excessive moves in debt markets.

In Australia, federal prosecutors are preparing criminal cartel charges against Deutsche, ANZ and Citigroup, over a A$2.3bn (£1.3bn) share issue.

Sewing said this month he would reduce global staff by more than 7,000, including 25% of the global equities business.

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