Sound retail banking franchise in the small canton and a loan book dominated by well-collateralized residential mortgages. Very strong capitalization. Extremely high likelihood of receiving extraordinary government support from the Canton of Glarus, if needed. Uncertainties as a result of proposed changes to the cantonal bank law. Weaker cost efficiency than most rated cantonal peers and concentration risk from focus on residential mortgage lending in Glarus and the neighboring economic area. The negative outlook reflects S&P Global Ratings' view that we could lower the rating on Glarner Kantonalbank (GLKB) over the next 12-24 months, during which time we expect more clarity with respect to the local government's supportive stance toward the bank and planned change of the cantonal bank law.
