DBRS Comments on Equitable Trust Plan to Become a Bank

DBRS notes that The Equitable Trust Company (the Trust; rated BBB, Stable) and its parent company Equitable Group Inc. (the Company; rated BBB (low), Stable) (collectively, Equitable) announced on February 26, 2013, their intention to apply to The Office of the Superintendent of Financial Institutions (OSFI) and to the federal Minister of Finance for permission to convert the Trust from a trust company operating under the Trust and Loans Companies Act to a Schedule I bank operating under the Bank Act. DBRS views the proposal as neutral to Equitable’s credit profile and does not anticipate making any changes to Equitable’s ratings as a result of the announcement.

The Company believes that, in the longer term, operating as a bank will support the development of the business, promote efficiencies, appeal to a new generation of borrowers and depositors, and may provide advantages in raising capital. Such a conversion should have no impact on the Trust’s regulatory capital position or its current business model, but will simplify regulatory compliance slightly as the change would place “Equitable Bank” under federal OSFI regulation, rather than the current dual federal and provincial regulation. Approval is required from both OSFI and the Minister of Finance, Canada and the Company cautions that there can be no assurance as to when or if these approvals will be received.

Note:
The applicable methodologies are Global Methodology for Rating Banks and Banking Organisations (June 2012), Rating Holding Companies and Their Subsidiaries (September 2012), and DBRS Criteria: Intrinsic and Support Assessments (February 2009), which can be found on DBRS’s website at www.dbrs.com.