TORONTO, June 11 Moody's Investors Service on
Wednesday said it revised its outlook downward on certain debt
and deposit ratings of Canada's largest banks, following the
Canadian government's plans to implement a "bail-in" regime to
avoid a taxpayer-funded bailout in the event of a financial
The U.S.-based credit ratings agency said it revised its
outlook to "negative" from "stable," on the supported senior
debt and uninsured deposit ratings of the banks, which include
Royal Bank of Canada, Toronto-Dominion Bank and
Bank of Nova Scotia.
"The negative outlook reflects Moody's view that the balance
of risk for the Canadian banks' senior debt holders and
uninsured depositors has shifted to the downside," the agency
said in a statement.
Moody's, which did not change its debt ratings on the banks,
also cited "the accelerating global trend toward reducing the
public cost of future bank resolutions through such
Under a "bail-in" system, certain bank debt can be converted
to equity in the event of a crisis. Several countries, including
Canada, have embraced the idea as part of changes designed to
prevent costly taxpayer-funded bank bailouts.
The practice came under fire when Cyprus tithed depositors
in order to keep its banks from collapsing last year.
Canada responded by clarifying that depositor accounts would
not be used in any potential Canadian bail-in.
Moody's said the lowered outlook applies to RBC, TD,
Scotiabank, the country's three largest banks, as well as Bank
of Montreal, Canadian Imperial Bank of Commerce
, National Bank of Canada and Caisse Central
Desjardins, Canada's largest association of credit unions.
(Reporting by Cameron French, editing by G Crosse)