Research Update: Swiss Glarner Kantonalbank Downgraded To 'AA-' On Expected Weakening Of Local Government Support; Outlook Negative

The Swiss canton of Glarus aims to amend the existing cantonal bank law in order to reduce its current 68% ownership in Glarner Kantonalbank (GLKB) and remove the cantonal guarantee for eligible debt obligations by December 2024. We think the measures indicate a gradual weakening of the likelihood of timely and sufficient extraordinary government support to the bank from Glarus. We are therefore lowering the long-term issuer credit rating on GLKB to 'AA-' from 'AA', and affirming our 'A-1+' short-term rating. The negative outlook indicates that we might lower our assessment of extraordinary and ongoing government support once there is more clarity on the canton's stance toward the bank and the decision on amendment is final, which we expect within

...- The Swiss canton of Glarus aims to amend the existing cantonal bank law in order to reduce its current 68% ownership in Glarner Kantonalbank (GLKB) and remove the cantonal guarantee for eligible debt obligations by December 2024. - We think the measures indicate a gradual weakening of the likelihood of timely and sufficient extraordinary government support to the bank from Glarus. - We are therefore lowering the long-term issuer credit rating on GLKB to '##-' from '##', and affirming our 'A-1+' short-term rating. - The negative outlook indicates that we might lower our assessment of extraordinary and ongoing government support once there is more clarity on the canton's stance toward the bank and the decision on amendment is final, which we expect within the next 12-24 months following the people's vote....

Research Update