DBRS Assigns CIBC Mellon Trust Company AA (low) and R-1 (middle) Deposit Ratings with Stable Trends

DBRS has today assigned CIBC Mellon Trust Company (CMT) a Long-Term Deposits and Senior Debt rating of AA (low) and a Short-Term Deposits rating of R-1 (middle), both with Stable trends. The ratings apply only to wholesale deposits; CMT has no plans to issue debt under these ratings or to take in retail deposits. CMT is one of the two legal entities that comprise CIBC Mellon.

The long-term rating is composed of a support assessment of SA1, notched down by one rating level from the rating of one of CIBC Mellon’s two joint-venture owners, The Bank of New York Mellon (BNY Mellon; AA with a Stable trend). Although the anticipated support from its other joint-venture owner, Canadian Imperial Bank of Commerce (CIBC; AA with a Negative trend), remains a material consideration in the rating, it is not to the same extent because BNY Mellon’s primary businesses are asset servicing and issuer services globally, whereas CIBC Mellon is less of a core operation for CIBC.

While the anticipated support from BNY Mellon is very strong, it is difficult for implicit support to match the clarity and legality of an unconditional guarantee. DBRS considers this difference to be worth one notch on the long-term rating.

In the event BNY Mellon’s rating falls below CIBC’s rating, it is possible CMT’s rating may be notched from the higher of the two joint-venture owners’ ratings.

CMT’s business model revolves around leveraging BNY Mellon’s technology platform in a business where economies of scale are critical.

The intrinsic analysis is based on CIBC Mellon, which is composed of CMT and its larger sister company, CIBC Mellon Global Securities Services Company (GSS). Although separate legal entities, the two companies operate as a single firm and are viewed in the marketplace as one. Most senior executives have responsibilities for both CMT and GSS.

Notes:
The applicable methodologies are Rating Banks in Canada and Enhanced Methodology for Bank Ratings – Intrinsic and Support Assessments, which can be found on our website under Methodologies.

This is a Corporate (Financial Institutions) rating.