Moodys downgrades ING Bank of Canada

TORONTO — Moody’s Investors Service downgraded ING Bank of Canada on Friday after a two-notch downgrade of its Dutch corporate parent ING Bank N.V.The debt rating agency cut its senior deposit ratings of ING Bank of Canada to Baa1 from A2 on Friday after a two-notch downgrade of Dutch parent ING Bank N.V.’s financial strength rating to C-.“Today’s actions reflect the potential adverse effects of ING Bank N.V.’s lower capacity to support its Canadian subsidiary, as captured by its lower standalone credit assessment,” Moody’s said.“Moody’s expectation of the willingness or likelihood that ING would provide support to ING Bank of Canada if needed has not changed.” The agency also raised concerns about ING’s narrow business model in Canada in an increasingly more competitive market.ING offers basic banking services in Canada including high-interest savings and no-fee chequing accounts as well as mutual funds and mortgage lending.“Relative to peers, ING Bank of Canada has elevated interest rate risk because of its reliance on interest revenues and the product options embedded in the core Canadian residential mortgage product,” Moody’s said.“Moody’s believes that ING Bank of Canada manages these exposures carefully, but in a stress environment they could still result in material losses.”Moody’s cut the Canadian banks’ standalone bank financial strength rating to C- and its short-term deposit ratings were downgraded to Prime-2 from Prime-1.ING Bank of Canada’s outstanding subordinated bonds, which are unconditionally and irrevocably guaranteed by ING Bank N.V., were downgraded by four notches to Baa2 from A1.All the ratings carried a negative outlook.The Canadian Press

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