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CORRESP
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CORRESP

100 King Street West, 18th Floor,
 Toronto, ON M5X
1A1

 October 16, 2012

 Via
EDGAR

 Kevin W. Vaughn

 Accounting
Branch Chief

 Securities and Exchange Commission

 Washington, D.C.

 20549

Re:
Bank of Montreal

 Form 40-F for the Fiscal
Year Ended October 31, 2011

 Filed December 6, 2011

Form 6-K

 Filed
August 28, 2012

 File No. 001-13354

 Dear Mr. Vaughn:

 I am writing to respond to your letter of September 25, 2012. I set out below your
comments in bold type and Bank of Montreal’s response thereafter.

 Form 40-F for Fiscal Year Ended October 31, 2011

Exhibit 2 – Management’s Discussion and Analysis

 Allowance for Credit Losses, page 84

1.
We note your definition of unexpected loss (UL) on page 83 and that you use it both to assess the extent and correlation of risks before authorizing new exposures and as part
of your allowance for credit losses model. Please revise your future filings to address in greater detail how you use the “unexpected loss” measure and how your use of an expected loss methodology in managing your segments interrelates
with your consideration of unexpected loss. Discuss how your unexpected loss measures have changed over time, and clearly identify the factors that affect this measure in general as well as specifically during the periods presented.

 The use of unexpected loss models to assess the extent and correlation of risk before authorizing new exposures refers
to our use of economic capital. Our economic capital models provides a forward-looking estimate of the difference in our maximum potential loss in economic (or market) value and our expected loss, measured over a specified time interval and using a
defined confidence level.

 We will elaborate on this in future filings and address how unexpected loss measures have changed over time.

 Effective Q1, 2012 we have updated our approach to determining the collective allowance (formerly the “general allowance”)
and it no longer explicitly incorporates the use of unexpected loss. Accordingly, our future filings will include an updated overview of the collective allowance methodology.

 Table 3: Returns on Equity and Assets, page 101

2.
We note you present return on equity and return on assets in this table. Please revise your future filings to also present the average equity to average total assets ratio in
this table.

 We will include the average equity to average total assets ratio in our future filings.

Table 5: Liquid Assets, page 101

3.
We note your disclosure on page 89 that liquid assets include unencumbered, high-quality assets that are marketable, can be pledged as security for borrowings, and can be
converted to cash in a time frame that meets your liquidity and funding requirements. We also note your liquid assets disclosure here in Table 5. Please revise your future filings to disclose the following:

•

 Disaggregate your Securities line to disclose the balance by type of securities included, and if intra-period balances vary significantly, please disclose the
weighted average balance as well.

 We will provide disclosure in our future filings to align the balances by
security type to our disclosure in Note 3 of our annual consolidated financial statements. Intra-period balances do not vary significantly, however we will monitor the balances and add disclosure if appropriate.

•

 Clarify whether the Liquid Assets presented in Table 5 represent your “supplemental liquidity pools” as referenced on page 89 that are maintained
for contingent liquidity risk management purposes, and if not, how those pools relate to the assets presented in Table 5.

 Table 5 does include our supplemental liquidity pools and other assets that are considered liquid assets. We will provide disclosure in our future filings to clarify that they are included.

•

 Please revise your discussions of the supplemental liquidity pools to more clearly describe whether you maintain the supplemental liquidity pool at either the
parent company level, or a lower level such as individual subsidiary, country, or business unit level. Consider providing further granular data about these different liquidity pools. Briefly discuss how you manage the supplemental liquidity pool
levels between these levels as well as any regulatory requirements for minimum amounts at various levels.

 The
supplemental liquidity pools are held at the parent company level, Bank of Montreal and BMO Harris Bank. We will provide disclosure in our future filings to clarify where supplemental liquidity pools are held, provide more granular data and discuss
how we manage the supplemental liquidity pools including minimum regulatory requirements.

•

 You disclose that the definition of your Net Liquidity Position is based on a stressed scenario. In future filings, please consider disclosing the inputs and
assumptions considered in such a scenario as well as to qualitatively discuss the outputs of such testing.

 We
will provide disclosure in our future filings to enhance the disclosure around our stress testing.

Page

2

 Table 9: Average Assets, Liabilities and Interest Rates, page 104

4.
We note you present your deposits by customer and currency, but group all other interest bearing liabilities together including your subordinated debt, securities sold but not
yet purchased, and securities lent or sold under repurchase agreements. We also note that your securities sold but not yet purchased and securities lent or sold under repurchase agreements have accounted for a significant portion of your other
liabilities in the past two years. Please revise your future filings to disaggregate these line items in this table. Also, revise your future filings to disclose the maximum amount of borrowings at any month-end during the last three fiscal years
for securities lent or sold under repurchase agreements.

 We will provide disclosure in our future filings to disaggregate securities sold but not yet purchased and securities lent or sold under repurchase agreements. We will also disclose the maximum amount of borrowings
at any month end for the last three fiscal years for securities lent or sold under repurchase agreements.

 Table 11: Net Loans and Acceptances
– Segmented Information, page 106

5.
We note that the data for the ratios “gross impaired loans and acceptances as a % of equity and allowance for credit losses” with and without purchased portfolios by
geographic location was unavailable by country. Please revise your future filings to explain why this information is unavailable by country, and consider presenting the ratios based on the consolidated level elsewhere in your filing such as Table
15.

 We allocate ‘Total Equity’ to our businesses based on a management view by line of business, rather
than geography, therefore this component of the ratio noted in Table 12 is not available. We believe that equity allocation consistent with the management of the business is appropriate. We will simplify our disclosure by moving this ratio to the
overall enterprise table on Impaired Loans (Table 15).

 Exhibit 3 – Consolidated Financial Statements

Notes to the Consolidated Financial Statements

Note 4: Loans, Customers’ Liability Under Acceptances and Allowance for Credit Losses, page 126

6.
We note your impaired loans policy that loans guaranteed by the Government of Canada are not impaired until one year past due. We also note your policy for write-offs of
credit card, consumer installment, other personal, and some small business loans. In an effort to provide consistent and significant policy disclosures, please revise your future filings to include your write-off policy for residential mortgages as
well as corporate and commercial loans. Revise your disclosure on page 131 to disclose the percentage of loans past due 90 days or more but not impaired that were guaranteed by the Government of Canada.

We will enhance our disclosure in future filings to note the write-off policy for residential mortgages and corporate and commercial loans.

Page

3

 In future filings we will disclose the percentage of loans past due 90 days or more but not impaired
that were guaranteed by the Government of Canada in the 2012 version of the Loans Past Due Not Impaired table (on page 131 of our 2011 Annual Report)

Note 26: Operating and Geographic Segmentation, page 167

7.
We note your disclosure on page 168 that the provisions for credit losses are allocated to each segment based on applying the expected loss methodology to the loans in that
segment. You disclose that amounts reported in the Corporate Services segment address the difference between the expected loss methodology and the incurred loss methodology, the latter of which is used for your consolidated reporting. You also
disclose that during Fiscal 2011 you transferred $1 billion of impaired real estate secured loans from the P&C U.S. segment to Corporate Services and that prior periods were restated to reflect this transfer. However, the provisions for credit
losses for the P&C U.S. and the Corporate Services segments for fiscal 2010 and 2009 were unchanged from the presentation in your 2010 Form 40-F.

 Please address the following:

•

 Tell us and revise the segment footnotes and segment discussions of your MD&A in your future filings to more clearly explain why the provisions for credit
losses were positive for your Corporate Services segment for Fiscal 2010 and 2009.

 As noted, credit losses
charged to the operating groups are on an Expected Loss Basis. The expected loss methodology used in our segment results incorporates a through the cycle view of credit losses on portfolios versus actual losses that occurred in the period on a
defaulted loan. During economic downturns the provision for credit losses on an Actual Loss Basis may be higher than provision for credit losses on an Expected Loss Basis (and the opposite can occur during strong economic times). In both Fiscal 2009
and 2010, the total Bank specific provision for credit losses on an Actual Loss Basis exceeded total provision for credit losses on an Expected Loss Basis. This resulted in an additional provision for credit losses reported in Corporate Services to
reconcile to total Bank on an Actual Loss Basis.

 We will provide disclosure in our future filings to more clearly explain the
provision for credit losses in Corporate Services.

•

 Provide us with a table that quantifies the total adjustment recorded in Corporate Services to the provision for each of the last three fiscal years under
Canadian GAAP as well as for each the comparative nine month periods ended July 31, 2012 and 2011 under IFRS that reduces the total provision from an expected loss model to the amount recorded under Canadian GAAP or IFRS, respectively.
Reconcile this adjustment to total provision for credit losses allocated to the Corporate Services segment for each period, and explain any differences.

Page

4

Canadian GAAP

(C$ millions)

2011

2010

2009

 Reported Actual Provision for Credit Losses
(PCL)

857

1,049

1,603

 Expected Loss Provision Allocated to Operating
Groups

 P&C Canada

547

502

387

 P&C US

202

124

92

 Private Client Group (PCG)

9

7

5

 Capital Markets (CM)

120

264

146

 Total Expected Loss (EL)
Provision

878

897

630

 Actual provision for credit losses (less
than)/greater than EL

(21
)

152

973

 Adjustment booked to Corporate
Services

(21
)

152

973

Difference

0

0

0

Page

5

IFRS

 (C$ millions)

YTD Q3
2012

YTD Q3
2011

 Reported Actual Provision for Credit Losses

573

850

 Expected Loss Provision allocated to Operating Groups

 P&C Canada

422

409

 P&C US

254

123

 PCG

11

7

 CM

73

89

 Total Expected Loss (EL) Provision

760

628

 Actual provision for credit losses (less than)/greater than EL

(187
)

222

 Adjustment booked to Corporate Services

(187
)

222

 Difference

0

0

•

 Tell us and revise your future filings to discuss why the provision allocated to Corporate Services represented 15% and 61% of the total provision in Fiscal
2010 and 2009 if the Corporate Services segment provision only includes the difference in the expected loss and GAAP models as indicated in your disclosures.

As noted above, the years in question were in an economic downturn and actual provisions were higher than expected losses particularly in 2009;
the difference was large enough to account for a significant portion of the banks total provision. We will provide disclosure in future filings on the reasons for changes in the amount of provision for credit losses reported in Corporate Services.

•

 Tell us if the impaired loans transferred to the Corporate Services segment during Fiscal 2011 had provisions recorded during the prior periods presented and
if so, why the provision amounts in the P&C U.S. and Corporate Services segments were not restated for Fiscal 2010 and 2009 as your sentence on page 168 seems to imply. To the extent the Corporate Services segment continues to hold loans, revise
your MD&A segment discussions in your future filings to separately quantify the ending and average loan balance held and to separately quantify any provisions for credit losses on the loans in this portfolio to allow the reader to differentiate
such amounts from any negative adjustment for the difference between expected losses and incurred losses on the other loan portfolios.

Page

6

 Impaired loan balances were transferred from P&C US to Corporate Services and we restated the
prior period balance sheet and income statement. We did not allocate expected credit losses on the impaired loan portfolio either before or after it was transferred. Therefore when the impaired loans were transferred from P&C US to Corporate
Services no restatement of the provision for credit losses for prior periods for the portion of this portfolio that was impaired was required.

 We will revise our disclosure to provide loan balances in Corporate Services going forward and the related provision for credit losses.

8.
Since you use the expected loss methodology for segment management purposes, revise your MD&A in your future filings to provide the reader with sufficient information to
understand the respective credit trends you are experiencing and allocating to each segment for segment management purposes.

•

 Revise the credit quality sections of your document to more clearly address your use of the expected loss methodology for management purposes. Differentiate
this methodology from the incurred loss methodology used for your consolidated reporting both at the conceptual level as well as the quantified level in terms of your provisions for credit losses and allowance for loan losses. More clearly explain
how you use the expected loss data for segment management purposes.

 We will provide disclosure in our future
filings to ensure that the provision for credit losses on an Expected Loss Basis is clearly distinguished from the provision for credit losses on an Actual Loss Basis. We employ an expected loss methodology for management reporting purposes and this
is presented in our operating and geographic segment disclosures. The expected loss methodology allocates expected losses to the segment for management purposes with the difference between expected credit losses and actual credit losses reported in
Corporate Services. For purposes of managing the business, we believe that allocating the expected losses to the business at the time the loan is originated provides a clear picture of the total profitability of the loan and leads to better decision
making.

•

 Revise the MD&A of your future annual and interim filings to address the segment provision amounts in greater detail.

We will provide disclosure in our future filings to enhance our segment provision disclosure.

•

 For each segment clearly address the credit trends experienced and expected that are captured in your segment results, and highlight any c