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Reykjavik, Feb 29, 2008 - (ACN Newswire) - Moody's Investors Service today downgraded Glitnir Bank's financial strength rating ("BFSR") to C- from C and its long-term foreign and local currency deposit ratings to A2 from Aa3. The Bank's Prime-1 short-term rating was affirmed. The outlook on all ratings is stable. These rating actions conclude the review for possible downgrade initiated on 30 January 2008.
In less than a year Moody's has changed Glitnir's ratings on four occasions:
1. February 2007: BFSR downgraded from C+ (negative outlook) to C (stable outlook).
2. February 2007: Long-term rating upgraded to Aaa from A1 due to changes in Moody's methodology.
3. April 2007: Long-term rating downgraded to Aa3 from Aaa due to refinement in Moody's methodology
4. February 2008: BFSR from C to C- and long-term rating downgraded from Aa3 to A2.
"We feel that the long-term credit rating of A2 is tolerable and trust that the last year's rollercoaster ride with our Moody's ratings is over. Our rating has changed from A1 to Aaa to Aa3 to A2 in the space of a year and there is a clear need for some stability from Moody's in relation to our ratings," says Ingvar H. Ragnarsson, Managing Director of Treasury at Glitnir. "As the markets have always treated Glitnir as a single A credit I would expect that it will not be greatly surprised by this change."
We would like to point out the in their Moody's states the following about Glitnir's liquidity profile:
After carrying out comprehensive stress tests, Moody's has concluded that Glitnir's liquidity profile is sound. Although the bank has large repayments due in 2008, its alternative liquidity, both on balance sheet and in the form of committed back-up lines, should cover these, said Kimmo Rama, lead analyst for Glitnir at Moody's.
This reflects the fact that Glitnir is in a strong position with a comfortable liquidity position of more than EUR 7 billion of immediately available funds to meet less than EUR 2.5 bn repayment in 2008".
On the loan-portfolio Moody's furthermore states:
Moody's conducted stress tests on Glitnir's loan portfolio subjecting it to different default, asset growth and revenue assumptions as well as scenarios in which problem loans increased sharply. These tests showed that Glitnir can withstand significant downward pressure.
"Glitnir is fundamentally well positioned", says Alexander K. Gudmundsson, CFO and EVP of Finance and risk management of Glitnir. "Glitnir's underlying country risk is to a large degree related to two of the world's richest economies, Iceland and Norway. The economies of both countries are based on resilient sectors such as energy (oil, geothermal), seafood, aluminum and tourism, which are not directly affected by the current credit and equity market turmoil. Furthermore Glitnir has a leading position within its niche sectors: Seafood; Sustainable Energy and Offshore Service Vessels. Sectors that are not affected by the market turmoil and even negatively correlated to it. Glitnir will further increase its emphasis on these fast growing sectors in light of the current market development".
Glitnir is also rated by Fitch and S&P, being the only Icelandic bank rated by S&P. After Moody's decision the outlook is stable for Glitnir's rating with the three rating agencies.
Contact:
Alexander K. Gudmundsson,
CFO and EVP Finance division and risk management
+ 354 440 4500,
e-mail: alexander.gudmundsson@glitnir.is
Bjørn Richard Johansen,
Managing Director, Corporate Communication,
mobile +47-47 800 100,
e-mail: brj@glitnir.no
Vala Pálsdóttir,
Head of IR,
mobile: +354 440 4989,
mobile: +354 844 4989,
e-mail: vala.palsdottir@glitnir.is.
Topic: Corporate Announcement
Source: Glitnir Bank
http://www.acnnewswire.com
From the Asia Corporate News Network
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