DBRS has announced that it:
has today taken a number of credit rating actions following the completion of the acquisition of Canadian Western Bank (CWB or the Bank) by National Bank of Canada (National; rated AA with a Stable trend). Morningstar DBRS has equalized all CWB’s credit ratings with those of National, including upgrading the Bank’s Long-Term Issuer Rating to AA from A (low) and Short-Term Issuer Rating to R-1 (high) from R-1 (low), and assigned Stable trends. The Support Assessment (SA) designation of SA1 is assigned to the Bank, reflecting Morningstar DBRS’ expectation of timely internal support from National. These actions remove CWB’s credit ratings from Under Review with Positive Implications where they were placed on June 12, 2024. The full list of credit ratings is provided in the table at the end of this press release.
KEY CREDIT RATING CONSIDERATIONS
Following the close of the acquisition, Morningstar DBRS considers CWB as a core banking subsidiary of National. This is a key element underpinning the equalization of the Bank’s credit ratings with those of National. CWB’s credit ratings will be maintained as the Bank will operate with a separate bank charter until its amalgamation with National, which is expected to occur on March 1, 2025.
In Morningstar DBRS’ view, the acquisition will bolster National’s diversification of revenue, both geographically and by product. CWB helps National become less concentrated in Québec, significantly bolstering National’s presence in Western Canada, including British Columbia and Alberta.
CREDIT RATING DRIVERS
As a fully owned banking subsidiary, CWB’s credit ratings will move in tandem with National’s credit ratings. Over the longer term, Morningstar DBRS would upgrade the credit ratings if National were to further build scale and diversification, both geographically as well as by revenues, while maintaining a similar risk profile.
Conversely, National’s credit ratings would be downgraded if there were significant integration issues with the acquisition. A sustained deterioration in asset quality or an inability to rebuild capital post-acquisition, would also result in a credit ratings downgrade.
Affected issues are CWB.PR.B and CWB.PR.D.
Thanks to Assiduous Reader RAV4guy for bringing this to my attention!
This entry was posted on Monday, February 3rd, 2025 at 9:02 pm and is filed under Issue Comments. You can follow any responses to this entry through the RSS 2.0 feed.
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CWB Upgraded to Pfd-2 by DBRS
DBRS has announced that it:
Affected issues are CWB.PR.B and CWB.PR.D.
Thanks to Assiduous Reader RAV4guy for bringing this to my attention!
This entry was posted on Monday, February 3rd, 2025 at 9:02 pm and is filed under Issue Comments. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.