Moody's warns it may put top Canadian banks on downgrade watch

 

A Moody's sign on the 7 World Trade Center tower (file photo)

Source: Press TV

http://www.presstv.ir/detail/2012/10/27/268966/canada-banks-at-risk-of-being-downgraded/

Moody’s Investors Service has warned that it could slash the credit ratings of five top Canadian banks as the country is increasingly feeling the pinch of global financial crisis.

The rating agency said on Friday that the possible lowering of the banks’ rating by one notch is due to “concerns about high consumer debt levels and elevated housing prices.”

According to fresh official figures, Canadian consumer debt has increased to record highs in recent months as the ratio of household debt-to-income reached 163.4 percent in the second quarter of 2012, up from 161.8 percent in the first quarter.

“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,” said David Beattie, Moody's vice president and senior credit officer.

Toronto-Dominion Bank, Bank of Nova Scotia, Bank of Montreal, Canadian Imperial Bank of Commerce (CIBC), and the National Bank of Canada are the ones that may be downgraded by the rating agency.

The Bank of Montreal's current Moody's rating is Aa2, the Bank of Nova Scotia's is Aa1, the CIBC's Aa2, the National's Aa2 and the Toronto-Dominion's, Aaa.

In a similar move in July 2012, Standard & Poor's (S&P) Ratings Services also put several Canadian banks on “negative outlook,” citing rising consumer debt and elevated housing prices