Fitch Affirms IDRs for Major Canadian Banks.

NEW YORK -- Fitch Ratings has affirmed the Issuer Default Ratings (IDRs) for the Major Canadian Banks including Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, Royal Bank of Canada and The Toronto-Dominion Bank. Ratings remain supported by sound overall financial fundamentals, comparatively stronger performance and diverse franchises. A complete list of ratings follows this release.

Financial results of the Canadian banks remain favorable in many international comparisons with a relatively stronger performance outlook. Major Canadian banks have been more resilient than peers thanks to a comparatively more healthy housing and mortgage market in Canada, lower exposure to problematic structured securities, solid levels of core earnings, and conservative overall risk management practices. Thanks to their stronger financial profiles, the major Canadian banks have not needed government capital support (in sharp contrast to many in other major markets). The major Canadian banks also enjoy solid depository funding bases and considerable liquidity.

The ratings of Canadian Imperial Bank of Commerce (CIBC) have been affirmed and removed from Rating Watch Negative; the ratings have been assigned a Negative Rating Outlook. The removal from Rating Watch recognizes the progress that CIBC has made in reducing its large exposure to U.S. subprime collateralized debt obligations (CDOs) and certain associated hedge counterparties. The company has also strengthened its risk management. The Negative Outlook reflects Fitch's expectation for comparatively greater challenges for CIBC, especially relative to its Canadian peers.

The Rating Outlooks remain Stable for Bank of Montreal, Bank of Nova Scotia, Royal Bank of Canada and Toronto-Dominion Bank. The Stable Outlooks for these banks reflect their ample capacities to manage through a more difficult operating environment both domestically and internationally. Tougher economic conditions will likely result in a further rise in asset quality problems. Nevertheless, the asset quality situation is anticipated to remain manageable within the context of current ratings. Additionally, non-performing assets will likely be maintained at better-than-peer averages.

Individual ratings of certain U.S. bank subsidiaries have been downgraded, given greater asset quality challenges faced in the U.S. market. In particular, the Individual rating of Harris Bankcorp and its banking subsidiary has been downgraded to 'B/C' from 'B' and the Individual rating of RBC Bancorporation (USA) and its banking subsidiary has been downgraded to 'C' from 'B'. In Fitch's rating criteria, a bank's standalone risk is reflected in Fitch's Individual ratings and the prospect of external support is captured in Fitch's support ratings. Collectively these ratings drive Fitch's long- and short-term IDRs. Fitch has also upgraded the long-term IDRs and long-term ratings of the RBC Bancorporation and its subsidiary bank and they now are aligned with their parent, Royal Bank of Canada, as are the ratings of the other Canadian banks with separate U.S. banking subsidiaries.

Canadian banks, notably those with an existing U.S. presence, likely will continue to look south to the U.S. for expansion. Fitch believes the Canadian banks will take a conservative approach toward acquisition opportunities in the U.S. market. Acquisitions will likely be focused on smaller deals, which are either in-market or in contiguous markets to existing U.S. operations. Acquisitions could center on either healthy banks or, in the case of troubled banks, government assisted deals to mitigate financial risk. In Fitch's view, unassisted transactions at this stage of the cycle are considered less likely as the banks will proceed with an abundance of caution. Once the cycle turns, the Canadian banks are expected to be more formidable acquirers.

Fitch has taken the following rating actions:

Bank of Montreal

--Long-term IDR affirmed at 'AA-'; Outlook Stable

--Short-term IDR affirmed at 'F1+';

--Senior unsecured debt affirmed at 'AA-';

--Subordinated debt affirmed at 'A+';

--Individual affirmed at 'B';

--Support affirmed at '1';

--Support Floor affirmed at 'A-'.

BMO Subordinated Notes Trust

--Subordinated debt affirmed at 'A+'.

BMO Capital Trust A-E 

--Preferred stock affirmed at 'A+'.

Harris Bankcorp, Inc.

--Long-term IDR affirmed at 'AA-'; Outlook Stable

--Short-term IDR affirmed at 'F1+';

--Individual rating downgraded to 'B/C' from 'B';

--Support affirmed at '1'.

Harris National Association

--Long-term IDR affirmed at 'AA-'; Outlook Stable

--Long-term deposits affirmed at 'AA';

--Short-term IDR affirmed at 'F1+';

--Short-term deposits affirmed at 'F1+';

--Individual downgraded to 'B/C' from 'B'

--Support affirmed at '1'.

The affirmation of the IDR has no impact on the rating of Bank of Montreal's covered bonds.

The Bank of Nova Scotia

--Long-term IDR affirmed at 'AA-'; Outlook Stable

--Short-term IDR affirmed at 'F1+';

--Long-term deposits affirmed at 'AA-';

--Senior debt affirmed at 'AA-';

--Subordinated debt affirmed at 'A+';

--Short-term debt affirmed at 'F1+';

--Individual rating affirmed at 'B';

--Support affirmed at '1';

--Support Floor affirmed at 'A-'.

BNS Capital Trust

--Trust securities affirmed at 'A+'.

Scotiabank Capital Trust

--Trust Securities affirmed at 'A+'.

The affirmation of the IDR has no impact on the rating of Bank of Nova Scotia's covered bonds.

Canadian Imperial Bank of Commerce

--Long-term IDR affirmed at 'AA-' and removed from Rating Watch Negative; Outlook Negative

--Short-term IDR affirmed at 'F1+' and removed from Rating Watch Negative;

--Short-term Debt affirmed at 'F1+' and removed from Rating Watch Negative;

--Senior unsecured debt affirmed at 'AA- and removed from Rating Watch Negative ';

--Subordinated debt affirmed at 'A+' and removed from Rating Watch Negative;

--Preferred Stock assigned at 'A';

--Individual rating affirmed at 'B' and removed from Rating Watch Negative;

--Support affirmed at '1';

--Support floor affirmed at 'A-'.

Canadian Imperial Holdings, Inc.

--Short-Term debt affirmed at F1+ and removed from Rating Watch Negative

CIBC Capital Trust

--Preferred stock assigned at 'A'.

The affirmation of the IDR has no impact on the rating of Canadian Imperial Bank of Commerce's covered bonds.

Royal Bank of Canada

--Long-term IDR affirmed at 'AA'; Outlook Stable

--Short-term IDR affirmed at 'F1+';

--Short-term Debt affirmed at 'F1+';

--Senior unsecured debt affirmed at 'AA';

--Subordinated debt affirmed at 'AA-';

--Individual rating affirmed at 'A/B';

--Support affirmed at '1';

--Support floor affirmed at 'A-'.

RBC Capital Trust

RBC Capital Trust II

--Preferred Stock affirmed at 'AA-'

RBC Bancorporation (USA)

--Long-term IDR upgraded to 'AA' from 'AA-'; Outlook Stable

--Short-term IDR affirmed at 'F1+';

--Individual downgraded to 'C' from 'B';

--Support affirmed at '1'.

RBC Bank (USA)

--Long-term IDR upgraded to 'AA' from 'AA-'; Outlook Stable

--Short-term IDR affirmed at 'F1+';

--Short-term deposits affirmed at 'F1+';

--Long-term deposits upgraded to 'AA+' from 'AA';

--Individual downgraded to 'C' from 'B';

--Support affirmed at '1'.

RBC Centura Capital Trust I

--Preferred Stock upgraded to 'AA-' from 'A+.

RBC Financial (Caribbean) LTD 

RBTT Bank LTD

--Long-term IDR affirmed at 'A+'; Outlook Stable

--Short-term IDR affirmed at 'F1';

--Individual rating affirmed at 'B/C';

--Support affirmed at '1';

RBTT Finance LTD

--Senior Debt affirmed at 'A+'.

The affirmation of the IDR has no impact on the rating of Royal Bank of Canada's covered bonds.

The Toronto-Dominion Bank

--Long-term IDR affirmed at 'AA-'; Outlook Stable

--Short-term IDR affirmed at 'F1+';

--Senior unsecured debt affirmed at 'AA-';

--Subordinated debt affirmed at 'A+';

--Preferred stock affirmed at 'A+';

--Commercial paper affirmed at 'F1+';

--Individual rating affirmed at 'B';

--Support affirmed at '1';

--Support floor affirmed at 'A-'.

TD Banknorth Inc.

--Long-term IDR affirmed at 'AA-'; Outlook Stable

--Short-term IDR affirmed at 'F1+';

--Individual rating affirmed at 'B';

--Support affirmed at '1'.

TD Bank, NA

--Long-term IDR affirmed at 'AA-'; Outlook Stable

--Senior debt affirmed at 'AA-';

--Short-term IDR affirmed at 'F1+';

--Short-term deposits affirmed at 'F1+';

--Long-term deposits affirmed at 'AA';

--Individual rating affirmed at 'B';

--Support affirmed at '1'.

TD Capital Trust I and II

--Preferred Stock affirmed at 'A+'.

Northgroup Preferred Capital Corporation

--Preferred stock affirmed at 'A+'.

Hudson United Bank

--Subordinated debt affirmed at 'A+'.

First Massachusetts Bank, NA

--Subordinated debt affirmed at 'A+'.

Commerce Bank, N.A.

--Long-term Deposits affirmed at 'AA'.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.