Fitch Ratings has today placed Kaupthing Bank’s, Glitnir Banki’s, and Landsbanki Islands’ Long- and Short-term Issuer Default ratings (IDRs), senior and subordinated debt ratings and Individual ratings on Rating Watch Negative (RWN).
The Support ratings of ‘2’ and Support Rating Floors of ‘BBB’ have been affirmed.
While Fitch believes that the three banks’ liquidity is currently sufficient, diminishing confidence in the sector has increased the risk of unanticipated calls on liquidity while severely restricting funding options. Moreover, the recent sharp depreciation of the ISK and the heightened risk of a ‘hard landing’ for the Icelandic economy are likely to adversely impact asset quality and performance.
Nevertheless, Fitch notes that the business fundamentals of the three banks currently remain sound. Liquidity appears comfortable and the banks are currently able to operate without recourse to the capital markets for some months to come.