Canada’s banks revised downwards again–this time by S&P
by The Daily Lede
Canada’s six biggest banks have been given another negative rating, this time by Standard and Poors.
S&P cut the outlooks of Toronto-Dominion Bank, Royal Bank of Canada, Bank of Nova Scotia, Bank of Montreal, Canadian Imperial Bank of Commerce and National Bank from stable to negative.
“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,” Tom Connell, an S&P credit analyst, said in a statement Friday.
Earlier in July of this year, Moody’s Investors Services cut the outlook of Canada’s banks from stable to negative due to 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 crisis.
Under a “bail-in” system, certain bank debt can be converted to equity to avoid a liquidity squeeze in the event of a crisis.