DBRS Changes Trend to Negative on U.S. subsidiaries of Canadian Banking Groups on Sovereign Support

DBRS, Inc. (DBRS) has today changed the trend to Negative on most long-term ratings of BMO Financial Corp. (BFC) and TD Bank US Holding Company (TDUS) as well as their bank subsidiaries. The trend change follows DBRS’s assignment of a Negative trend on the Issuer Ratings for Bank of Montreal (BMO) and The Toronto-Dominion Bank (TD), the ultimate parent for BFC and TDUS, respectively.

The rating action reflects DBRS’s view that anticipated changes in Canadian legislation and regulation mean that the potential for timely support for systemically important institutions is declining and is likely to eventually result in a change in DBRS’s support assessment from SA2 to SA3 for the large Canadian banks including BMO and TD. Currently, the final ratings for these institutions benefit from an uplift of one notch above their intrinsic assessment (IA) due to the SA2 support assessment.

DBRS currently assigns both BFC and TDUS an SA1 support assessment based on DBRS’s view of strong and predictable support from their respective parent. As a supported rating with a SA1 designation, the ratings for BFC and TDUS will move in tandem with their respective parent’s rating. The Short-Term ratings remain unchanged.

DBRS TELECONFERENCE
DBRS will host a teleconference tomorrow on bank rating actions related to systemic support hosted by Alan Reid, Group Managing Director, Global Financial Institutions and Sovereign Ratings Group, the discussion will include comments from Elisabeth Rudman, John van Boxmeer, William Schwartz and other members of the Global Financial Institutions Group. The discussion will last approximately 30 minutes and will be followed by a question-and-answer session.

TELECONFERENCE DETAILS
Date: Thursday 21 May 2015
Time: 4 p.m. BST/5 p.m. CET/11 a.m. EDT
Dial-In Details:
North America (Toll-Free): +1 800 379 4140
United Kingdom (Toll-Free): 0800 4960 495
International: +44 20 8196 2881
Reservation Number: 21768960

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal applicable methodology is the Global Methodology for Rating Banks and Banking Organisations (June 2014). Other applicable methodologies include the DBRS Criteria – Support Assessments for Banks and Banking Organisations (March 2015) and DBRS Criteria: Rating Bank Capital Securities – Subordinated, Hybrid, Preferred & Contingent Capital Securities (February 2015). These can be found at: http://www.dbrs.com/about/methodologies.

The primary sources of information used for this rating include company documents and SNL Financial. DBRS considers the information available to it for the purposes of providing this rating was of satisfactory quality.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.

Lead Analyst: John Mackerey
Rating Committee Chair: Alan G. Reid

BMO Financial Corp.
Initial Rating Date: 30 June 2010
Most Recent Rating Update: 25 July 2014

TD Bank Holding Company
Initial Rating Date: February 21, 2006
Most Recent Rating Update: 16 July, 2014