People leave Deutsche Bank’s Manhattan headquarters with white envelopes that are reportedly their exit papers on July 8, 2019 in New York City (SPENCER PLATT)

New York (AFP) – S&P reaffirmed Deutsche Bank’s credit ratings on Monday, calling a restructuring plan “necessary,” while noting that the bank still faces a challenging economic environment in Europe.

The restructuring represents “a logical and necessary reaction to the deeper environmental challenges that Deutsche Bank now faces,” S&P said. “We view the downsizing and reinvestment plans as executable, albeit not without risk.” 

S&P Global Ratings classified Deutche’s long-term debt at “BBB+” and short-term debt at “A-2,” both solidly within investment grade. 

Deutsche’s restructuring plan, unveiled on July 7, includes the elimination of 18,000 jobs and exiting equities sales and trading.

The move is part of an effort to shift the German bank’s focus away from the United States and other foreign markets and back towards Germany and Europe after a potential merger with fellow lender Commerzbank was abandoned.

But Deutsche Bank, like other European financial heavyweights, “faces a more difficult economic and market environment,” S&P said. 

“We see no reason to think this very weak revenue environment will improve in the coming years, although some activities continue to see secular growth.”

S&P said it could lower its rating on Deutsche Bank in the next 12-24 months if the bank fails to hit its targets.

Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.