S&P cuts Canadian banks

Standard & Poor's it lowered by one notch its long- and short-term issuer credit ratings on six Canadian financial institutions: Bank of Nova Scotia, Central 1 Credit Union, Caisse Centrale Desjardins, Home Capital Group Inc., Laurentian Bank of Canada and National Bank of Canada. The outlooks are stable.

The agency said it affirmed its long- and short-term issuer credit ratings and stable outlooks on Bank of Montreal (and its core subsidiary BMO Financial), Canadian Imperial Bank of Commerce and Manulife Bank of Canada. However, the stand-alone credit profiles on these institutions were reduced by one notch, along with stand-alone credit profile-linked issue ratings.

At the same time, S&P said it affirmed its long- and short-term issuer credit ratings on Royal Bank of Canada and on Toronto-Dominion Bank and revised the respective outlooks to stable from negative.

Finally, for the downgraded Canadian financial institutions, the agency said it also lowered the ratings on their senior unsecured debt. Similarly, for those Canadian financial institutions for which S&P lowered the stand-alone credit profile, the agency also lowered the respective ratings on nondeferrable subordinated debt, preferred shares and hybrids.

S&P said it lowered its assessment of industry risk to reflect expectations for ongoing intensification of competitive dynamics of the Canadian banking sector, though overall S&P's view is that Canada still remains positioned favorably vis-‡-vis most of its global peers.

The agency said a slowing economy risks exacerbating the already-intense competition between banks for loan and deposit share and puts further pressure on the margin and profitability of Canadian financial institutions' retail and commercial lending businesses, the cornerstone of Canadian banking and the largest contributor to revenues.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.