S&P revises down outlook on Canada's big six banks to negative
TORONTO (Reuters) - Standard & Poor's said on Friday it had revised its outlook on Canadian banks to "negative," due to concerns the government is becoming less willing to bail out banks in the event of a financial crisis.
The move comes a month after rival rating agency Moody's also revised its outlook to "negative" from "stable," as part of an annual review. The move followed Moody's decision in June to revise its outlook lower on certain debt and deposit ratings at Canadian banks.
In both instances, Moody's cited concerns about the Canadian government's plans to implement a "bail-in" regime to avoid a taxpayer-funded bank bailout in the event of a financial crisis.
S&P said its actions are based on the view that the proposed bail-in policy regime might lead it to trim ratings on the banks within two years.
The agency said it is revising its outlook on Royal Bank of Canada (RY.TO: Quote), Toronto-Dominion Bank (TD.TO: Quote), The Bank of Nova Scotia (BNS.TO: Quote), Bank of Montreal (BMO.TO: Quote), Canadian Imperial Bank of Commerce (CM.TO: Quote) and National Bank of Canada (NA.TO: Quote) to "negative" from "stable."
"The outlook revision reflects our expectation of reduced potential for extraordinary government support arising from implementation of the proposed new elements of the resolution framework for Canadian banks," S&P's credit analyst Tom Connell said in a statement.
(Reporting by Euan Rocha; Editing by Leslie Adler)
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