Deutsche Bank to Cut $11.1 Billion Metals, Mining Exposure

Was Deutsche Bank's 11% Bonus Pool Cut a Surprise?

Deutsche Bank AG, Germany’s biggest bank, said it plans to shrink its 10 billion euros ($11.1 billion) of exposure to metals, mining and steel as it seeks to cut risky holdings in those industries.

Just 35 percent of the portfolio is classified as investment grade, Deutsche Bank said in a statement from Frankfurt on Friday. Gross loans account for 5 billion of the total, while irrevocable lending commitments make up 3 billion euros, it said.

“This portfolio is of lower quality compared to our overall corporate credit portfolio,” Deutsche Bank said. “Our strategy is to reduce this credit portfolio due to elevated risks of this industry.”

Banks around the globe are grappling with the fallout of declining commodities prices as cooling emerging-market growth undermines demand from steel to energy. Deutsche Bank’s mounting provisions for faulty loans risk eroding earnings already hurt by legal charges and restructuring costs tied to job losses.

Deutsche Bank has about 16 billion euros of exposure to the oil and gas industry, of which about 60 percent is investment grade and less than 20 percent consists of “sectors that we consider higher risk and more impacted by the low oil price,” it said.

The company also has about 7 billion euros of shipping loans, of which “a high proportion” is sub investment-grade rated, reflecting the“ prolonged challenging market conditions over recent years,” it said.

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