Butterfield Bank Ratings Unaffected By Downgrade
Fitch Ratings issued a statement saying the Bank of Butterfield’s ratings are “unaffected” by Fitch’s downgrade of Bermuda, the rating agency said today.
Earlier today [June 26] Fitch downgraded Bermuda to ‘AA’ from ‘AA+’, saying the downgrade “reflects its weak macroeconomic performance relative to peers, deteriorating fiscal and government debt ratios and lack of a credible fiscal consolidation strategy.”
The most recent statement from the ratings agency said, “Fitch maintains BNTB’s ’1′ Support Rating and ‘A-’ Support Floor rating based the bank’s systemic importance to Bermuda.
“The Bermuda government continues to demonstrate strong willingness and ability to support the bank, and has previously demonstrated this support by contractually guaranteeing the principal and interest on BNTB’s outstanding preferred stock.
“While the rating Outlook on Bermuda remains Stable, any adverse change to the country’s Outlook would result in an equivalent change to BNTB’s rating Outlook,” the statement from Fitch said.
The full statement from Fitch follows below:
Bank of N.T. Butterfield & Son Limited’s (BNTB) Long-term (L-T) Issuer Default Rating (IDR) of ‘A-’and Short-term (S-T) IDR of ‘F1′ are unaffected by Fitch’s downgrade of Bermuda’s L-T Foreign Currency IDR to ‘AA’ from ‘AA+’, and L-T Local Currency IDR to ‘AA+’ from ‘AAA’. BNTB’s L-T and S-T IDRs are support-driven.
Fitch maintains BNTB’s ’1′ Support Rating and ‘A-’ Support Floor rating based the bank’s systemic importance to Bermuda. The Bermuda government continues to demonstrate strong willingness and ability to support the bank, and has previously demonstrated this support by contractually guaranteeing the principal and interest on BNTB’s outstanding preferred stock.
Fitch also notes that BNTB has a significant deposit market share and maintains a traditional relationship with the local government, as it is the oldest bank on the island and one of Bermuda’s largest employers.
While the rating Outlook on Bermuda remains Stable, any adverse change to the country’s Outlook would result in an equivalent change to BNTB’s rating Outlook.
Fitch further notes that as BNTB’s L-T and S-T IDRs are currently based on their Support Floor Rating, any additional negative changes to Bermuda’s rating would also likely result in a downgrade to BNTB’s IDRs
BNTB’s Viability Rating (VR) of ‘bb+’, which reflects the intrinsic creditworthiness of the bank, is supported by BNTB’s liquid balance sheet, strong capital levels, diversified revenue stream and return to profitability. Product and geographic concentrations are considered a credit weakness (refer to release ‘Fitch Affirms Bank of NT Butterfield & Son Limited’s
L-T IDR at ‘A-’; Outlook Stable’ May 8, 2012). Fitch notes that BNTB’s VR is also unaffected.
BNTB is the leading local bank in Bermuda with total assets of just under $9 billion. BNTB’s core strategy is to provide community banking services in Bermuda and Cayman as well as wealth management services including asset management, private banking and trust services in Bermuda, the Bahamas, Cayman, Guernsey, Switzerland and the United Kingdom. Assets under management total $6.1 billion, while Assets under Administration were $39.6 billion.
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I wonder how much BNTB bought of the new govt bonds??