DBRS Limited (DBRS Morningstar) placed the ratings of Concentra Bank (Concentra or the Bank), including the Bank’s Long-Term Issuer Rating at A (low) and Short-Term Issuer Rating at R-1 (low), Under Review with Negative Implications. The rating actions follow Equitable Bank’s (Equitable; rated BBB with a Positive trend by DBRS Morningstar) February 7, 2022, announcement that it has entered into a definitive agreement to buy Credit Union Central of Saskatchewan’s (SaskCentral; rated R-1 (low) with a Stable trend by DBRS Morningstar) majority 84% ownership stake in Concentra. The transaction is targeted to close in the second half of 2022, subject to customary closing conditions and required regulatory approvals.
KEY RATING CONSIDERATIONS
Concentra’s current Support Assessment (SA) of SA1 reflects the willingness and ability of SaskCentral as majority owner to support Concentra. The Under Review with Negative Implications status considers the impact on the SA of SaskCentral’s sale of Concentra, as the Bank will no longer be a supported subsidiary of SaskCentral. When the transaction closes, Concentra’s ratings will be equalized with the ratings of Equitable and subsequently withdrawn at the time Concentra is amalgamated with Equitable under a single bank licence.
Assuming no material changes upon the closing of the transaction, Concentra’s ratings would be equalized with the ratings of Equitable (BBB with a Positive trend). If the transaction does not close as expected and SaskCentral remains supportive of Concentra as its majority owner, DBRS Morningstar would remove Concentra’s ratings from Under Review with Negative Implications and confirm the ratings with Stable trends.
A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/373262.
All figures are in Canadian dollars unless otherwise noted.
The principal methodology is the Global Methodology for Rating Banks and Banking Organisations (July 19, 2021; https://www.dbrsmorningstar.com/research/381742). Other applicable methodologies include the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings (February 3, 2021; https://www.dbrsmorningstar.com/research/373262).
The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found on the issuer page at www.dbrsmorningstar.com.
The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.
Generally, the conditions that lead to the assignment of a Negative or Positive trend are resolved within a 12-month period. DBRS Morningstar’s outlooks and ratings are under regular surveillance.
For more information on this credit or on this industry, visit www.dbrsmorningstar.com.
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