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DBRS confirms Laurentian Bank ratings, revises trend to negative

DBRS on Dec. 11 confirmed Montreal-based Laurentian Bank of Canada's ratings.

Its short-term issuer rating and instruments remained R-1 (low), with a stable trend.

Its long-term issuer, deposits and senior debt ratings were confirmed at A (low) and its subordinated debt rating at BBB (high), but with a negative trend.

The revision to negative reflects the rating agency's concern over Laurentian Bank's "control functions and underwriting procedures at a sensitive time in the housing cycle." The company had recently disclosed its inadvertent sale of certain mortgages due to documentation and client misrepresentation issues. While the repurchase of those mortgages is unlikely to have a material impact on operations, DBRS remarked on the possible effect on Laurentian's reputation and on the subsequent impact on funding sources for a bank reliant on brokered deposits.