Standard & Poor’s Ratings Services has affirmed its credit ratings on Bank of Montreal subsidiaries, Harris Bankcorp Inc., Harris Nesbitt Financing Inc., and Harris Trust & Savings Bank. Their outlooks have been revised to stable. S&P also affirmed its ratings on Bank of Montreal.

The ratings on Chicago, Ill.-based Harris Bankcorp. reflect the consolidated strength of its U.S. parent, Harris Financial, as well as the implied and demonstrated support of its ultimate parent, BMO. “As we view Harris Bankcorp., Harris Nesbitt Financing, and Harris Trust & Savings Bank as core subsidiaries of BMO, their ratings have been equalized with those on BMO,” said Standard & Poor’s credit analyst Donald Chu. “On a standalone basis, the ratings on these subsidiaries would be lower.”

Harris Financial remains the centerpiece of BMO’s U.S. expansion strategy, and contains both the growing U.S. personal and commercial banking and wealth management operations, the rating agency notes. In the past few years, the bulk of the parent’s excess capital has been funneled toward Harris Financial to fund its acquisition activities.

Harris Financial’s banking operations are supported by a good franchise in the Chicago region, a very good level of capital adequacy, and its strong asset quality, S&P says. This has been offset by the continued drag on earnings of the U.S. discount brokerage operations that was largely acquired in the past two to three years, and the softness seen in some of the U.S. investment banking operations.

BMO’s results for 2003 and the nine months ending July 2004 continue to be very strong, with solid earnings growth being driven by lower specific provisions and strong operating performance in the personal and commercial group, S&P comments. “Overall, BMO appears to be well on track to meet all of its key financial targets for 2004.”

“The stable outlook on BMO’s U.S. subsidiaries mirrors that of its parent, BMO, which is one of the more conservatively run banks in Canada. The stable outlook on BMO reflects our expectation that the bank will continue to exhibit consistently solid earnings performance, manageable asset quality, and maintain very strong capital on a risk-adjusted basis,” it concludes.