Moody's warns six Canadian banks of rating cuts
29 October 2012
Global credit rating agency Moody's Investors Service said that it could cut the long-term credit ratings of six major Canadian banks in the coming months on concerns over high household debt and rising home prices amid increased risks to the country's economy due to continuation of the global financial crisis.
"Domestically, we're concerned about the high and increasing levels of consumer indebtedness and elevated housing prices, and we feel that they may tend to leave the Canadian banks more vulnerable to downside risks to the economy than they have been in the past," David Beattie, Moody's vice president and senior credit officer, said in an interview to Reuters.
The banks put on watch are Bank of Montreal, Bank of Nova Scotia, Caisse Centrale Desjardins, CIBC, and National Bank of Canada and Toronto-Dominion Bank.
The country's largest bank Royal Bank of Canada has been excluded from the list apparently due to its downgrade by Moody's by two notches earlier this year as part of a review of several global banks including Bank of America, JPMorgan Chase, Citigroup and Goldman Sachs.
Canada's banking sector is considered to be one of the soundest in the world and the rating agency indicated that the cuts were likely to be by only one notch.
"We continue to believe that the Canadian banks rank among the strongest in the world, and this review is based on concerns about system-wide and bank-specific risks that aren't fully captured in their current ratings," Beattie said.