Dominion Bond Rating Service has confirmed its ratings on HSBC Bank Canada, despite the fact that the parent company will no longer guarantee its deposits.

Standard & Poor’s also announced that HSBC Holdings PLC’s decision will not affect its ratings or outlook on HSBC Canada.

DBRS says it is confirming several HBSC Canada ratings, and assigning ratings of R-1 (middle) and A (high) with Stable trends to the non-guaranteed short-term and long-term deposits and senior debt ratings, respectively.

The new ratings are the result of HSBC Holdings discontinuing its unlimited guarantee of deposits at its subsidiaries effective June 30, 2005. Any debt issued with a guarantee will remain under the guarantee until maturity.

The ratings being assigned today will apply to debt issued on or after July 1, 2005. The decision to announce the new ratings now is to provide clarity on DBRS future rating expectations, it says.

Despite the removal of the guarantee, DBRS expects HSBC Bank Canada to remain an integral part of HSBC Group. HSBC Holdings has signed an undertaking with the Canada Deposit Insurance Corporation to ensure HSBC Bank Canada complies with Canadian regulatory requirements, including the Bank Act.

The agency says that the ratings of HSBC Bank Canada reflect the bank’s efficient productivity, favourable credit quality despite some geographic and industry concentrations, and ongoing strength in customer service.

S&P says that the guarantee reflected an historical arrangement that accompanied Hongkong Bank of Canada’s (now HSBC Canada) acquisition of Bank of British Columbia in 1986.

“Given that HSBC Canada is a much larger institution today and an important player in the Canadian banking market, CDIC has agreed to release HSBC Holdings from the obligation to provide the guarantee to deposits of HSBC Canada,” S&P says, noting that deposits at HSBC Canada will receive the same coverage by CDIC as other banks in Canada.