June 21, 2018 / 9:19 PM / in 7 months

UPDATE 1-Fitch downgrades Deutsche Bank outlook amid strategy concerns

* Bank has come under pressure from ratings agencies

* Follows downgrade by S&P earlier this month

* Fitch sees “substantial execution risk” (Updates with details, background, no comment from bank)

FRANKFURT, June 21 (Reuters) - The credit ratings agency Fitch on Thursday revised its outlook for Deutsche Bank to negative from stable amid concern’s about the bank’s restructuring and strategy, the latest blow to the German lender’s reputation.

Germany’s largest bank has come under pressure from ratings agencies following a management reshuffle, a refocused strategy and a spate of losses.

The move “reflects the substantial execution risk Deutsche Bank faces in implementing its restructuring and Fitch’s view that failure to strengthen its business model would result in the bank’s downgrade,” the agency said.

A spokeswoman for Deutsche Bank declined to comment.

Credit ratings are critical for any company but especially crucial for a bank such as Deutsche, whose perceived health is important in winning business.

Deutsche, which like all financial institutions, is among big issuers of debt securities and highly reliant upon credit ratings. Lower ratings can result in higher funding costs, which could further hamper Deutsche’s attempt to return to profitability after three consecutive years of losses.

Earlier this month, Standard & Poor’s downgraded Deutsche Bank.. Moody’s has also lowered its outlook for Deutsche.

Thursday’s move by Fitch comes after it downgraded the bank in September.

Fitch, which kept its ratings unchanged, praised measures by Deutsche to shift resources away from its sprawling investment bank to retail banking and asset management.

“But the bank’s performance in 2018 will be negatively affected by additional restructuring expenses and by likely pressure on revenue, and the bank’s modest return target for 2019 highlights the challenges it faces,” Fitch said.

The bank’s longer-term targets depend on cost savings at the investment bank and the integration of its Postbank unit, “which will be challenging,” it said. (Reporting by Tom Sims Editing by James Dalgleish)

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