TEXT-S&P Takes Various Rating Actions On Canadian Banks

Thu Dec 13, 2012 7:55pm EST
 
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-- We believe that the Canadian banking sector is encountering incremental pressure from headwinds facing the Canadian economy, which is heightening economic risk in the banking system. We also believe that industry risk for the Canadian banking sector is increasing. We expect that intensifying competition for loans and deposits will lead to pressure on profitability growth, especially in banks' retail businesses.

-- We are therefore lowering our issuer credit ratings by one notch on The 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 outlook is stable.

-- We are affirming our issuer credit ratings and stable outlooks on Bank of Montreal (and BMO Financial), Canadian Imperial Bank of Commerce, and Manulife Bank of Canada. We have lowered the related stand-alone credit profiles (SACPs) for these institutions by one notch, however.

-- We are also affirming our issuer credit ratings on Royal Bank of Canada and The Toronto-Dominion Bank, and revising the respective outlooks to stable from negative.

-- We are also affirming our issuer credit rating with a negative outlook on HSBC Bank Canada, which reflect those on its parent.

TORONTO (Standard & Poor's) Dec. 13, 2012--Standard & Poor's Ratings Services said today it lowered by one notch its long- and short-term issuer credit ratings on six Canadian financial institutions: The Bank of Nova Scotia (BNS), Central 1 Credit Union, Caisse centrale Desjardins, Home Capital Group Inc., Laurentian Bank of Canada, and National Bank of Canada. The outlooks are stable.

Standard & Poor's 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 (CIBC), and Manulife Bank of Canada.

The stand-alone credit profiles (SACPs) on these institutions have been reduced by one notch, along with SACP-linked issue ratings. At the same time, Standard & Poor's affirmed its long- and short-term issuer credit ratings on Royal Bank of Canada (RBC) and on Toronto-Dominion Bank (TD Bank) and revised the respective outlooks to stable from negative.   Continued...