Standard & Poor’s says it has placed its ratings on Bank of Montreal and its related subsidiaries on CreditWatch with negative implications.

S&P says the placement reflects its heightened concerns over the bank’s credit quality and the outlook for profitability improvement in the medium term.

On October 26, BMO announced large increases to gross impaired loans and consequent revisions to expected provisions for the fiscal year ending October 31.

S&P notes that “the rapidity of the loan quality deterioration presents concerns.”

BMO is also writing down investments retained in high-yield securities in off-balance-sheet vehicles.

S&P notes that it is evaluating the deterioration in BMO’s balance sheet relative to its peers. Canada’s banks will report earnings later in November.

If it does not appear that the bank’s profitability performance can recover quickly and progress to levels commensurate with other banks in North America, S&P says the ratings could be lowered.