Scotiabank questions S&P's cut, citing international reach

Fri Dec 14, 2012 3:52pm EST
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* Ratings agency cuts debt on six Canadian financials

* Cites housing-related concerns, worries of riskier assets

* Downgrade follows Moody's warning

* Shares little changed

By Cameron French

TORONTO, Dec 14 (Reuters) - Bank of Nova Scotia, one of Canada's largest banks, took issue on Friday with Standard & Poor's decision to cut its debt ratings, saying its international reach helps cushion it from a slowdown in Canadian lending.

S&P downgraded credit ratings on six Canadian financial institutions late on Thursday, a move that could raise their borrowing costs and crimp profit margins on the loans they make.

In addition to Scotiabank, Canada's No. 3 lender, the credit rating agency lowered ratings on Caisse Centrale Desjardins, a Quebec-based federation of credit unions. Also cut were No. 6 bank National Bank of Canada, Montreal-based Laurentian Bank of Canada, mortgage lender Home Capital Group and Vancouver-based Central 1 credit union.

The downgrade, which follows Moody's Investors Service's move in October to put five top Canadian banks on credit watch, is the latest sign of trouble for a banking industry widely considered the world's soundest.   Continued...