Research Update: Bank of Montreal 'A+/A-1' Ratings Affirmed Following Agreement To Acquire Bank of the West; Outlook Remains Stable

On Dec. 20, 2021, Bank of Montreal (BMO) announced a definitive agreement with BNP Paribas to acquire Bank of the West (BOTW) and its subsidiaries. The acquisition is consistent with BMO's strategic efforts to fuel greater growth and returns in the U.S. market, while allowing efficiency improvements. Nevertheless, the bank's capital ratios will decline substantially immediately following the acquisition, albeit from currently elevated levels, and there is some integration risk given the substantial size of the transaction and its cross-border nature. On Dec. 22, 2021, S&P Global Ratings affirmed its ratings on BMO, including its 'A+' long-term and 'A-1' short-term issuer credit ratings. The stable outlook reflects our view that the credit ratings of BMO and its subsidiaries are unlikely

...- On Dec. 20, 2021, Bank of Montreal (BMO) announced a definitive agreement with BNP Paribas to acquire Bank of the West (BOTW) and its subsidiaries. - The acquisition is consistent with BMO's strategic efforts to fuel greater growth and returns in the U.S. market, while allowing efficiency improvements. - Nevertheless, the bank's capital ratios will decline substantially immediately following the acquisition, albeit from currently elevated levels, and there is some integration risk given the substantial size of the transaction and its cross-border nature. - On Dec. 22, 2021, S&P Global Ratings affirmed its ratings on BMO, including its 'A+' long-term and 'A-1' short-term issuer credit ratings. - The stable outlook reflects our view that the credit ratings of BMO and its subsidiaries are unlikely to change given our expectation of a moderately high likelihood of extraordinary government support, as well as our view that BMO's risk-adjusted capital (RAC) ratio will likely fall and then rebuild...

Research Update