Fitch Ratings is affirming and simultaneously withdrawing Bank of Montreal (China) Co. Ltd.'s (BMOC) Long-Term Issuer Default Rating (IDR) of 'A+'.

Fitch is also affirming and withdrawing all other ratings, including the Shareholder Support Rating (SSR) of 'a+' and Short-Term IDR of 'F1+'. At the time of withdrawal, the Outlook was Negative, which is underpinned by China' Country Ceiling.

Fitch has chosen to withdraw BMOC's ratings for commercial reasons.

Key Rating Drivers

Ratings at Country Ceiling: BMOC's Long-Term IDR is the same as China's Country Ceiling, which is at the same level as China's Long-Term Foreign-Currency IDR of 'A+'/Negative. The Country Ceiling almost always caps a bank's Long-Term Foreign-Currency IDR because country risk, such as transfer and convertibility risks, in a subsidiary's jurisdiction could constrain the subsidiary's ability to use parental support to service foreign-currency obligations if required. This underpins the Negative Outlook on BMOC's Long-Term IDR at the time of withdrawal.

Shareholder Support-Driven IDR; Strategically Important: BMOC's Long-Term IDR is underpinned by strong institutional support from the ultimate parent, Bank of Montreal (BMO, AA-/Stable), as reflected in its SSR of 'a+'. Fitch views BMOC as strategically important to - and highly integrated with - its parent, but its Long-Term IDR is one notch lower than BMO's Viability Rating (VR) of 'aa-' to reflect the Chinese subsidiary's small role in the group compared with BMO's other foreign core subsidiaries.

BMOC is wholly owned by BMO, which has significant influence over the subsidiary's operations, risk management and strategy. Fitch expects BMOC to continue to function as a base for BMO's APAC operations. It plays a key role in facilitating cross-border transactions, particularly for investment and trade between China and Canada, and business referrals for the parent and other subsidiaries. The contribution of BMOC's operations to BMO's financial performance does not fully reflect the bank's outsized role in supporting the group's regional franchise.

Short-Term IDR: BMOC's Short-Term IDR is at the higher of two possible ratings that map to the Long-Term IDR, as we believe the parent's propensity to provide support is more certain in the near term.

No VR Assigned: Fitch did not assign a VR to BMOC at the time of withdrawal, as its intrinsic strength is subject to operational and financial support from its parent and it lacks a meaningful standalone franchise.

Rating Sensitivities

Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade

Not applicable as the ratings have been withdrawn.

Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade

Not applicable as the ratings have been withdrawn.

Sources of Information

The principal sources of information used in the analysis are described in the Applicable Criteria.

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

Public Ratings with Credit Linkage to other ratings

BMOC's IDRs are linked to the VR of its parent, BMO.

ESG Considerations

The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Following the withdrawal of ratings, Fitch will no longer provide the associated ESG Relevance Scores for BMOC. For more information on Fitch's ESG Relevance Scores, visit https://www.fitchratings.com/topics/esg/products#esg-relevance-scores.

(C) 2024 Electronic News Publishing, source ENP Newswire