Moody's reviews Bank of Montreal

Moody's Investors Service said it placed the long-term ratings of Bank of Montreal and its subsidiaries on review for downgrade following its announcement of its plan to acquire Marshall & Ilsley Corp. in an all-stock transaction valued at $4.1 billion.

The ratings on review include Bank of Montreal's Baa1 preferred stock, Aa3 subordinated bonds, Aa2 senior bonds and Aa2 senior deposits; BMO Subordinated Notes Trust's Aa3 subordinated bonds; Harris NA's A1 issuer rating, A2 subordinated bonds, A1 senior notes and A1 senior deposits; and the Ba1 preferred stock of Harris Preferred Capital Corp. and BMO Capital Trust II.

The agency said that during the review, it will examine the execution risks this major acquisition presents for Bank of Montreal. Risks listed by Moody's include merging personnel and instilling a consistent credit culture in Marshall & Ilsley's community-based banking network.

These merger execution challenges are compounded by the fact that Marshall & Ilsley has significant asset quality issues, the agency said, and Bank of Montreal's existing U.S. operations have underperformed and have not been consistently profitable in recent years.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.