Office buildings in Toronto’s financial district
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Toronto-based DBRS Ltd. has revised the rating trend on four of the Big Six banks from negative to stable, following the release of the new bail-in regime regulations by the federal government.

DRBS has changed the trend to “stable” from “negative” for Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce and National Bank of Canada, the rating agency announced Thursday.

The stable trends for Royal Bank of Canada and Toronto-Dominion Bank remain unchanged.

The rating actions are the result of the publication of the final regulations for Canada’s new bail-in regime for domestic systemically important banks (D-SIBs).

“The revision of the trend to stable from negative for the affected long-term ratings reflects DBRS’s view that a downgrade of existing senior debt for the D-SIBs is now unlikely,” DBRS says in a news release/

“The new bail-in regime in Canada reduces the likelihood of systemic support but bolsters the position of senior unsecured obligations by creating a new type of senior bank debt that is bail-inable,” DBRS says.

“The likelihood of systemic support does not go away immediately. Instead, DBRS expects that the likelihood of such support will decline as the banks build up their required new bail-inable debt,” it adds.

DBRS also downgraded the ratings of the subordinated debt of the D-SIBs by one notch to reflect the fact that legacy capital instruments would be subject to losses before bail-inable senior debt.