Butterfield Bank ratings not affected by Bermuda downgrade

WEDNESDAY, JUNE 27: The Bank of NT Butterfield’s ratings have not been affected by the downgrade of Bermuda from AA+ to AA by Fitch.

However, Fitch said: “Any adverse change to the country's outlook would result in an equivalent change to BNTB's rating outlook.”

Fitch said Butterfield’s  ‘1’ Support Rating and ‘A-’ Support Floor rating is based on the bank's importance to Bermuda.

“The Bermuda government continues to demonstrate strong willingness and ability to support the bank, and has previously demonstrated this support by contractually guaranteeing the principal and interest on BNTB's outstanding preferred stock.”

Fitch also notes that BNTB has a significant deposit market share and maintains a traditional relationship with the local government, as it is the oldest bank on the island and one of Bermuda's largest employers.

Fitch said in its press release: “While the rating outlook on Bermuda remains stable, any adverse change to the country's outlook would result in an equivalent change to BNTB's rating outlook.”

Fitch further notes that “as BNTB's L-T and S-T IDRs are currently based on their Support Floor Rating, any additional negative changes to Bermuda's rating would also likely result in a downgrade to BNTB's IDRs

“BNTB's Viability Rating (VR) of ‘bb+’, which reflects the intrinsic creditworthiness of the bank, is supported by BNTB's liquid balance sheet, strong capital levels, diversified revenue stream and return to profitability.

“Product and geographic concentrations are considered a credit weakness.

Fitch notes that BNTB's VR is also unaffected.

Editor’s note: In the interest of full disclosure, Don Burgess is a shareholder in Butterfield Bank.