Moody’s Investors Service downgrades Kaupthing Bank’s credit ratings

Moody’s Investors Service downgrades Kaupthing Bank’s credit ratings

NORDIC BUSINESS REPORT-29 February 2008-Moody’s Investors Service downgrades Kaupthing Bank’s credit ratings(C)1994-2008 M2 COMMUNICATIONS LTD

Icelandic financial group Kaupthing Bank hf said on Friday (29 February) that the international credit rating agency Moody’s Investors Service has downgraded Kaupthing Bank’s credit ratings.

The bank’s long-term deposit and senior debt ratings in local and foreign currencies have been downgraded one notch from Aa3 to A1 and the bank’s Financial Strength Rating from C to C-.

The bank’s rating for short-term obligations in local and foreign currencies, P-1, which is the highest short-term rating given by Moody’s, remains unchanged, Kaupthing said.

The outlook on all ratings is stable, the bank added.

According to Moody’s, Kaupthing’s recurring earnings power and capital adequacy weakened in 2007 from previously strong levels, and the bank’s business model remains reliant on investment banking and capital markets activities, both of which Moody’s expects to prove challenging over the coming years.

Moody’s notes that Kaupthing’s liquidity profile and cash position is strong, and the announced asset sale by Kaupthing Singer & Friedlander is also viewed positively in terms of liquidity.

Kaupthing Bank, headquartered in Reykjavik, Iceland, operates in ten countries, including all the Nordic countries, Luxembourg, Switzerland, the UK and the US. The bank has 2,719 employees and total assets of EUR42.9bn.

One British pound (GBP) is worth approximately 1.33 euros (EUR).

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