Moody's Investors Service has today 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. The outlook on all ratings is stable. 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. The adverse shift in market conditions may put downward pressure on the Bank's capital adequacy assuming moderate asset growth. 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. Even though the rating agency expresses concerns with regard to asset quality, it notes that it has conducted several stress tests on Kaupthing's loan portfolio, subjecting it among other things to different defaults, which showed that Kaupthing can withstand substantial downward pressure. See link below: http://www.kaupthing.com/Investors/Ratings/Moody's Further information: Gudni Adalsteinsson - Chief Treasurer, + 354 444-6126 or Jónas Sigurgeirsson - Chief Communications Officer, +354 444-6112 About Kaupthing Bank Kaupthing Bank offers comprehensive commercial and investment banking services to individuals, companies and institutional investors. The Bank is a leading player in all the main areas of the Icelandic financial market, and in addition to Iceland, the Bank's key markets are Denmark and the United Kingdom. The Bank focuses on the growth and development of its international activities and aims to be one of the leading investment banks in northern Europe. Kaupthing Bank operates in thirteen countries with its headquarters located in Reykjavík. The Bank's main subsidiaries are FIH Erhvervsbank in Denmark, Kaupthing Singer & Friedlander in the United Kingdom, Kaupthing Bank Sverige, Kaupthing Bank Luxembourg, Kaupthing Bank in Finland, Norvestia Oyj in Finland, Kaupthing New York, Kaupthing Switzerland, Kaupthing Bank Belgium and Kaupthing Bank Norge in Norway. The Bank also has activities in Isle of Man, the Dubai International Financial Centre (DIFC) and the Qatar Financial Centre (QFC). As of 31 December 2007 the number of full-time equivalent positions was 3,334 at Kaupthing Bank and its subsidiaries. www.kaupthing.com
Moody's downgrades Kaupthing Bank's credit rating to A1
| Source: Kaupthing Bank