DBRS lowers Laurentian Bank

DBRS said it downgraded its credit ratings on Laurentian Bank of Canada, including the bank’s long-term issuer rating to BBB (high) from A (low). This action ends the under review with negative implication status for the bank.

The agency also confirmed the AAA rating on Laurentian’s legislative covered bonds and ended that review as well.

The credit rating downgrades and negative trends reflect DBRS Morningstar’s view that LBC’s franchise strength and profitability prospects have significantly weakened with a limited visibility on the bank’s long-term strategic path. The fundamental challenges faced by the bank’s personal banking franchise in recent years have led to a sustained weakness in financial performance.

“Further, the bank's ability to improve earnings and growth prospects in the near to medium term will likely be affected by the adverse series of recent events, including the unexpected and sudden departure of the former president and CEO and the rapid succession of executive leadership departures, while there remains the uncertainty related to the delay in the bank’s renewed strategic plan. Of note, LBC continues to report the lowest levels of profitability among Canadian medium-size banks rated by the DBRS Morningstar,” the agency said in a press release.

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