Research: Rating Action: Moody’s upgrades ratings of Deutsche Bank Trust Company Americas and its subsidiaries, changes outlook to stable
New York, October 12, 2022 — Moody’s Investors Service (Moody’s) has today upgraded by one notch all the long-term ratings and assessments, including the Baseline Credit Assessments (BCAs), of Deutsche Bank Trust Company Americas (DBTCA, deposits to A1 from A2) and its sister trust companies. The outlooks were changed to stable. This action follows Moody’s 12 October 2022 announcement that it upgraded by one notch all the long-term ratings of DBTCA’s ultimate parent, Deutsche Bank AG (DB), and changed the outlook of DB to stable.
For a list of all affected ratings and assessments, please refer to the end of this press release.
RATINGS RATIONALE
BCA:
The upgrade of DBTCA’s BCA to baa1 from baa2 mainly reflects DB’s improved credit profile. While DBTCA has a lower-risk business profile, stronger asset quality and more robust capitalization than its parent, DBTCA’s credit profile is still heavily dependent upon the credit strength of DB given the close operational and reputational ties. This relationship constrains DBTCA’s BCA. However, the recent one-notch upgrade of DB’s BCA to baa2 reduces the negative impact of this constraint, supporting the one-notch upgrade of DBTCA’s BCA.
Moody’s expects DBTCA to maintain a strong solvency profile, which supports the stable outlook, although its capitalization will trend down as the firm continues to simplify its business mix and strengthen controls to levels more in line with other US trust banks.
LONG TERM RATINGS:
The one-notch upgrade of DBTCA’s and its sister companies’ long-term ratings reflects the one-notch upgrade of its BCA as well as the application of Moody’s Advanced Loss Given Failure (LGF) analysis in assessing the bank’s existing volume of loss-absorbing debt and the resulting loss severity for its different debt classes under Moody’s Banks Methodology.
DBTCA is ultimately owned by DB USA Corporation (DB USA, unrated), a US intermediate holding company (IHC) subsidiary of DB. DBTCA is a New York state-chartered bank and is affiliated with two smaller sister trust companies, Deutsche Bank Trust Company Delaware (DBTCD) and Deutsche Bank National Trust Company (DBNTC), which Moody’s considers to be closely integrated operationally with DBTCA. Both DBTCD and DBNTC are limited purpose trust companies that provide fiduciary and other services to DBTCA’s clients but do not accept customer deposits or make loans directly.
Moody’s expects that DBTCA and its sister trust companies will be resolved in a unified manner alongside DB USA, and their ultimate parent DB. To reflect this, Moody’s advanced LGF analysis includes the long-term debt and other capital instruments issued directly or indirectly by DB USA to DB to comply with regulatory requirements for internal loss absorbing capacity (ILAC), as well as including all tangible banking assets under DB USA within DB USA’s resolution perimeter. Moody’s also uses a firmwide loss rate assumption for DB USA of 8%, reflecting the rating agency’s view that a group-wide resolution coordinated in a unified manner would also result in a more orderly going-concern resolution for DB USA, DBTCA, and its sister trust companies.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings of DBTCA would be upgraded if the firm maintained a resilient solvency and operating profile and following an upgrade of DB’s ratings because of the close linkages of DBTCA with the broader DB group.
A downgrade of DB’s BCA could lead to a downgrade of DBTCA’s ratings given the close operational and reputational ties between these two entities, even if DBTCA retained robust standalone solvency and liquidity.
The ratings could also be downgraded due to a sustained decrease in the volume of bail-in-able debt relative to the bank’s tangible banking assets. This would lead to a higher loss severity of DBTCA’s or its sister companies’ liability classes at failure, likely resulting in a lower rating uplift under Moody’s Advanced LGF analysis.
LIST OF AFFECTED RATINGS
Upgrades:
..Issuer: Deutsche Bank National Trust Company
…. Adjusted Baseline Credit Assessment, Upgraded to baa1 from baa2
…. Baseline Credit Assessment, Upgraded to baa1 from baa2
…. LT Counterparty Risk Assessment, Upgraded to A1(cr) from A2(cr)
…. LT Counterparty Risk Rating (Foreign Currency), Upgraded to A1 from A2
…. LT Counterparty Risk Rating (Local Currency), Upgraded to A1 from A2
…. LT Issuer Rating, Upgraded to A1 from A2, Stable from Positive
…. LT Bank Deposit (Local Currency), Upgraded to A1 from A2, Stable from Positive
..Issuer: Deutsche Bank Trust Company Americas
…. Adjusted Baseline Credit Assessment, Upgraded to baa1 from baa2
…. Baseline Credit Assessment, Upgraded to baa1 from baa2
…. LT Counterparty Risk Assessment, Upgraded to A1(cr) from A2(cr)
…. LT Counterparty Risk Rating (Foreign Currency), Upgraded to A1 from A2
…. LT Counterparty Risk Rating (Local Currency), Upgraded to A1 from A2
…. LT Issuer Rating, Upgraded to A1 from A2. Stable from Positive
…. LT Bank Deposit (Local Currency), Upgraded to A1 from A2, Stable from Positive
..Issuer: Deutsche Bank Trust Company Delaware
…. Adjusted Baseline Credit Assessment, Upgraded to baa1 from baa2
…. Baseline Credit Assessment, Upgraded to baa1 from baa2
…. LT Counterparty Risk Assessment, Upgraded to A1(cr) from A2(cr)
…. LT Counterparty Risk Rating (Foreign Currency), Upgraded to A1 from A2
…. LT Counterparty Risk Rating (Local Currency), Upgraded to A1 from A2
…. LT Issuer Rating, Upgraded to A1 from A2, Stable from Positive
…. LT Bank Deposit (Local Currency), Upgraded to A1 from A2, Stable from Positive
Affirmations:
..Issuer: Deutsche Bank National Trust Company
…. ST Counterparty Risk Assessment, Affirmed P-1(cr)
…. ST Counterparty Risk Rating (Foreign Currency), Affirmed P-1
…. ST Counterparty Risk Rating (Local Currency), Affirmed P-1
…. ST Bank Deposit (Local Currency), Affirmed P-1
..Issuer: Deutsche Bank Trust Company Americas
…. ST Counterparty Risk Assessment, Affirmed P-1(cr)
…. ST Counterparty Risk Rating (Foreign Currency), Affirmed P-1
…. ST Counterparty Risk Rating (Local Currency), Affirmed P-1
…. ST Bank Deposit (Local Currency), Affirmed P-1
..Issuer: Deutsche Bank Trust Company Delaware
…. ST Counterparty Risk Assessment, Affirmed P-1(cr)
…. ST Counterparty Risk Rating (Foreign Currency), Affirmed P-1
…. ST Counterparty Risk Rating (Local Currency), Affirmed P-1
…. ST Bank Deposit (Local Currency), Affirmed P-1
Outlook Actions:
..Issuer: Deutsche Bank National Trust Company
….Outlook, Changed To Stable From Positive
..Issuer: Deutsche Bank Trust Company Americas
….Outlook, Changed To Stable From Positive
..Issuer: Deutsche Bank Trust Company Delaware
….Outlook, Changed To Stable From Positive
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Banks Methodology published in July 2021 and available at https://ratings.moodys.com/api/rmc-documents/71997. Alternatively, please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.
REGULATORY DISCLOSURES
For further specification of Moody’s key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody’s Rating Symbols and Definitions can be found on https://ratings.moodys.com/rating-definitions.
For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody’s rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider’s credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the issuer/deal page for the respective issuer on https://ratings.moodys.com.
For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.
The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.
These ratings are solicited. Please refer to Moody’s Policy for Designating and Assigning Unsolicited Credit Ratings available on its website https://ratings.moodys.com.
Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.
Moody’s general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://ratings.moodys.com/documents/PBC_1288235.
The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody’s affiliates outside the EU and is endorsed by Moody’s Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody’s office that issued the credit rating is available on https://ratings.moodys.com.
The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody’s affiliates outside the UK and is endorsed by Moody’s Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody’s office that issued the credit rating is available on https://ratings.moodys.com.
Please see https://ratings.moodys.com for any updates on changes to the lead rating analyst and to the Moody’s legal entity that has issued the rating.
Please see the issuer/deal page on https://ratings.moodys.com for additional regulatory disclosures for each credit rating.
Peter E. Nerby
Senior Vice President
Financial Institutions Group
Moody’s Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Donald Robertson
Associate Managing Director
Financial Institutions Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Releasing Office:
Moody’s Investors Service, Inc.
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JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
