Moody’s comments on RBC’s 2Q08 writedowns
Moody’s Investors Service has commented on the Royal Bank of Canada’s (RBC’s) announcement that it would take an approximate C$420 million charge, after tax and compensation adjustments, to its second quarter 2008 (2Q08) earnings. The bank’s structured credit exposures — including its exposure to U.S.
auction rate securities and the MBIA Insurance Corporation — produced most of these charges. Moody’s rates RBC B+ for bank financial strength and Aaa for long-term deposits. The rating outlook is stable.
In previous credit research on RBC, Moody’s noted its expectation that the bank’s structured credit exposure would likely produce further losses, but that those losses would be manageable, given the bank’s solid, predictable Canadian core earnings stream and its healthy level of capitalization. Moody’s senior credit officer, Peter Routledge, said that “today’s announced charges are within our previously stated expectations and are manageable within RBC’s current ratings level and outlook.” — www.theasianbanker.com (May 15 2008)–