April 23, 2020 / 7:51 PM / a month ago

S&P cuts Commerzbank rating, revises outlook for Deutsche Bank to negative

FILE PHOTO: The logo of Germany's Commerzbank is seen in the late evening sun on top of its headquarters in Frankfurt, Germany, September 29, 2016. REUTERS/Kai Pfaffenbach

FRANKFURT (Reuters) - The credit agency S&P said on Thursday that it had cut Commerzbank’s (CBKG.DE) credit rating by a notch and lowered its outlook for Deutsche Bank (DBKGn.DE) to negative from stable, as prospects for the lenders grow increasingly bleak amid the coronavirus outbreak.

The steps were part of a sweeping move by S&P for multiple lenders in Germany and elsewhere, and follow a similar effort by Fitch, another credit rating agency, last month.

“We expect bank earnings, asset quality, and in some cases, capitalization, to weaken meaningfully through year-end 2020 and into 2021,” S&P said in a statement.

S&P, which expects a “severe” recession in Germany this year, said of Commerzbank that it would “become increasingly challenging for it to deliver on its essential multi-year restructuring”.

S&P said Deutsche’s restructuring was “fundamentally on track” but acknowledged “substantial downside risks”.

Both banks, which are now rated BBB+ with a negative outlook, declined to comment.

Reporting by Tom Sims, Hans Seidenstuecker and Patricia Uhlig; Editing by Chizu Nomiyama

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