This file photo shows the signage for credit rating agency Moody’s in New York. (File photo)
Moody’s Investors Service has downgraded the long-term credit ratings of six top Canadian banks as the global financial crisis takes its toll on consumer debt and housing prices.
The rating agency said on Monday that it lowered by one notch the ratings of the Canadian Imperial Bank of Commerce, Bank of Montreal, Scotiabank, Caisse Centrale Desjardins, National Bank of Canada, and Toronto-Dominion Bank.
The banks now have a rating range between AA1 and AA3, which despite the downgrade still puts them as the world’s economically-sound financial institutions.
The downgrade came as Canada suffers from record-high consumer debt and soaring house prices, according to the agency.
“Today’s downgrade of the Canadian banks reflects our ongoing concerns that Canadian banks’ exposure to the increasingly indebted Canadian consumer and elevated housing prices leaves them more vulnerable to unpredictable downside risks facing the Canadian economy than in the past,” said Moody’s Vice President David Beattie.
Last year, the ratio of Canadian household debt reached a record 165 percent, and housing prices rose 20 percent.
Another rating agency, Fitch, also on Monday voiced concerns over the debt situation in Canada.
The new lowered ratings have hit the economic confidence in Canada.
GVN/SAB/HN/HJL
