- Moody's places Kaupthing Bank on review following the acquisition of NIBC

Moody's Investors Service has today placed on review for possible downgrade the
Aa3/C ratings of Kaupthing Bank hf ("Kaupthing") following the announcement
that it was to acquire the Dutch bank NIBC Bank N.V. ("NIBC"). At the same
time, Moody's has placed on review for possible upgrade the Baa1 long term
rating of NIBC. 

The Bank's ratings for short-term obligations in local and foreign currencies,
P-1, which is the highest rating given by Moody's, remains unchanged. NIBC's
rating for short-term obligations in local and foreign currencies, P-2, and the
rating for financial strength, C-, were confirmed with a stable outlook. 

Moody's decision to place the ratings of Kaupthing on review for possible
downgrade reflects the weaker financial fundamentals of NIBC and the execution
risk involved in the proposed acquisition. Importantly, Moody's notes that the
troublesome sub-prime book would not be sold to Kaupthing along with the NIBC,
but would remain with the vendor JC Flowers. Furthermore, the rating agency
notes that the two banks are a good strategic fit with complementary products
and that the acquisition of NIBC would further enhance Kaupthing's geographical
reach outside of its home market of Iceland. 

Further information:
Gudni Adalsteinsson - Chief Treasurer, + 354 444-6126
Jónas Sigurgeirsson - Chief Communications Officer, +354 444-6112

Moody's Press Release (pdf)