- R&I RATING:(BBB-); Downgraded from (A+) Remains on the Rating Monitor with a view to downgrading

On October 9, Iceland government has decided to place Kaupthing Bank hf., the
country's largest bank under its control after placing under administration the
third-largest Glitnir banki hf and the second-largest Landsbanki Islands hf.
Iceland's financial system has been severely damaged. Volatile market has
pushed down Iceland Krona further and the real economy continues to
deteriorate. R&I downgraded Iceland's Foreign Currency Issuer Rating to A+ on
October 7, pointing out that the repayment risk of private debt could be
transferred to the government once all commercial banks are nationalized. Now
the concern has become a reality. Total assets of 3 largest banks exceeded more
than 9 times of GDP at the end of 2007 and Iceland government has no other
choice but to seek financial assistance from the third party to manage its
massive current account deficit and stabilize exchange rates. Considering these
factors, R&I has downgraded the rating to BBB-. Since the rating could be
changed further depending on the future financial assistance from the third
party and the restructuring of financial sector, R&I has retained the rating on
the Rating Monitor with a view to downgrading 

 
R&I press release can be approached in attachment.