DBRS has confirmed the ratings of National Bank, following the bank’s announcement that it will relieve clients from asset-backed commercial paper uncertainties.

The rating agency says that it has confirmed the ratings as a result of National Bank’s solid capital ratios, even though this announcement will negatively impact the Tier 1 capital ratio by approximately 35 basis points.

Other considerations include National Bank’s ability to generate earnings through a diversified revenue base, despite the increased exposure to the ABCP market of approximately $2 billion ($1.9 billion in third-party conduits and $150 million in bank conduits ABCP), it said.

The $2 billion ABCP that National Bank will purchase will come from:

  • ABCP currently held in the National Bank and Altamira public mutual funds and in the pooled funds used by Natcan in its discretionary management (except for two alternative funds), and by National Bank Trust in its private investment management;
  • ABCP purchased through the bank, National Bank Financial or National Bank Direct Brokerage and held in their accounts by individual retail clients; and
  • ABCP purchased through the bank, NBF or NBDB by other clients who have total holdings of $2 million or less in ABCP in their accounts and who do not qualify as accredited investors under securities regulations.