Iceland review - 2006, Qupperneq 95

92 BUSINESS SUPPLEMENT BUSINESS SUPPLEMENT 93
BUSINESS SUPPLEMENT
Moody’s and Fitch upgraded Landsbanki in
2005, in part due to the Bank’s international
diversification. In March, Moody’s upgraded
Landsbanki’s deposit and senior debt ratings
from A3 to A2, and affirmed the Bank’s C rating
for financial strength. At the end of November,
Fitch upgraded Landsbanki’s individual rating
from C to B/C and also raised the Bank’s rating
for issuing Tier 1 subordinated debt from BBB+
to A-.
We have full confidence in the abilities and
expertise of the credit agencies covering
Landsbanki. The two agencies, Moody’s
and Fitch, both receive extensive access to
Landsbanki data on a regular basis as well as
being consulted prior to large corporate events,
such as new acquisitions. We were pleased to
note Moody’s affirmation on April 4th of the
Bank’s deposit and debt ratings at A2/P-1.
Moody’s concurrent decision to change the
outlook for Landsbanki’s Financial Strength
Rating to negative from stable reflects their
view that the Bank’s operating environment
will be more challenging in the medium
term. However, Landsbanki is confident of its
outlook both in light of the Bank’s international
diversification and the fact that Moody’s, in a
separate announcement released today, has
confirmed Iceland’s sovereign rating Aaa with
a stable outlook.
Systemic risk has been identified as a major
risk factor for the Icelandic banking system.
How is Landsbanki prepared to meet such
adverse market developments?
Sigurjón Þ. Árnason: Today, Landsbanki’s
fundamentals and financial strength is at its
historical best. The core income generation of
all the Icelandic banks, including Landsbanki,
has improved strongly, especially since 2003,
and the revenue sources of the banking system
are increasingly internationally diversified. HALLDÓR J. KRISTJÁNSSON