September 18, 2019 / 2:41 PM / a month ago

S&P downgrades outlook for some German banks amid risks for industry

FILE PHOTO: The financial district with Germany's Deutsche Bank and Commerzbank is pictured in Frankfurt, Germany, March 18, 2019. REUTERS/Ralph Orlowski

FRANKFURT (Reuters) - The ratings agency Standard & Poor’s on Wednesday downgraded the outlooks for a handful of unlisted yet large German banks amid growing risks to the sector.

DekaBank [DSUGUD.UL], an important player in the nation’s savings bank sector, and DZ Bank [DETGNY.UL], a pillar of Germany’s cooperative banks, were among the financial institutions that had their outlooks downgraded to “negative” from “stable”.

In its announcement, S&P cited continued drags from poor cost efficiency, risks from technology disruption and low interest rates. A slowing German economy may also hurt banks, S&P said.

Deutsche Apotheker und Aerztebank and DZ HYP, both German cooperative banks, also saw their outlooks downgraded.

The affected banks either declined to comment or did not immediately respond to requests for comment.

Germany’s banking sector has struggled to generate profits in recent years because costs are high and competition is fierce, with more than 1,500 lenders serving the nation’s 80 million people. Other nations such as France and the U.S. have more concentrated banking sectors.

Deutsche Bank (DBKGn.DE), Germany’s largest lender, was unaffected by Wednesday’s ratings action. The bank is in the midst of a broad restructuring, involving job cuts and the exit of certain business lines in an effort to become profitable.

Reporting by Tom Sims and Hans Seidenstuecker; Editing by Michelle Martin

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