- Fitch Affirms Straumur-Burdaras on Acquisition of Finnish eQ 23 May 2007 11:48 AM (EDT)

Fitch Ratings-London/Frankfurt-23 May 2007: Fitch Ratings has today affirmed
Iceland-based Straumur-Burdaras Investment Bank's ("Straumur") ratings at
Issuer Default 'BBB-' (BBB minus), Short-term 'F3', Individual 'C/D' and
Support '3'. The Support Rating Floor is unchanged at 'BB-' (BB minus). The
Outlook on the Issuer Default rating is Stable. 

The affirmation follows the announcement that Straumur has acquired a 62% stake
in Finnish bank eQ Corporation ("eQ"). eQ is active in brokerage, asset
management and corporate finance businesses. A mandatory tender offer will be
launched in June 2007 for all the remaining shares and option rights in eQ. 

This acquisition is in line with Straumur's ambition to become a leading Nordic
investment bank. eQ's business is entirely Finnish, but complements well
Straumur's corporate finance and brokerage coverage in the Nordic region, given
that the latter already has operations in Iceland, Denmark and Sweden, as well
as the UK and the Netherlands. Straumur plans to utilize its balance sheet to
expand eQ's product offering into areas such as debt financing and to support
its corporate finance business. The transaction also provides Straumur with
asset management operations, an area the bank was planning to expand into. eQ's
businesses are essentially fee-driven activities, with very limited proprietary
trading activities. This will help develop and diversify more sustainable
income streams. 

The acquisition price of around EUR260m for 100% of the shares represents about
15.5x eQ's 2006 net income and will be paid in cash. This will generate a
significant goodwill of nearly EUR200m. As a result of the acquisition,
Straumur's Tier 1 ratio is expected to decrease to around 25% from 36% at
end-2006, but its Fitch eligible capital base should remain in excess of
EUR1.1bn. Given the still large financial gains in Straumur's profit, the
impact of eQ is relatively limited at the bottom-line level. However, eQ
represents a noticeable add-on to net fee and commission income. eQ's cost base
is around half of Straumur's; however, being involved in staff-intensive
businesses, the Finnish bank has around 170 employees while Straumur's staff
totalled 150 at end-March 2007. 

At end-March 2007, Straumur was the fourth-largest bank in Iceland by total
assets, although its equity base is broadly comparable in size to Landsbanki
Islands' and Glitnir Banki's. It received its investment banking license in
January 2004, and has since pursued its strategy to become a leading
specialised investment bank in the Nordic region. 

Contact: Gordon Scott, London, Tel: + 44 (0)20 7417 4307; Alexandre Birry, +44
(0)20 7862 4150; Olivia Perney Guillot, Frankfurt, +49 69 7680 76243.