On February 15th 2010 Moody's initiated a review for possible down grade of
BankNordik following BankNordik's acquisition of 12 bank branches from
Sparbank.
Moody's Investor Service today announced that their review has been concluded
and that they confirm the A3 long-term and Prime-2 short-term local and foreign
currency deposit ratings as well as the C- bank financial strength rating
(BFSR) of BankNordik. The outlook on all ratings is stable.
Thus, BankNordik has been able to maintain its current ratings since 2008, when
the bank received its first rating from Moody's. 10 Danish banks are rated by
Moody's and all except two has been downgraded since 2009.
In their press release Moody's writes that “its current assessment incorporates
information from BankNordik's non-audited interim consolidated statements
published on 16 August 2010”.
Moody's notes that “the acquired branches accounted for approximately 25% of
the bank's total loan book as of 30 June 2010. The review for possible
downgrade was triggered by the execution risk embedded in this substantial
operation and the uncertainty surrounding the combined bank's portfolio
quality, growth strategy and cost management going forward. Moody's review
focused on evaluating the execution and assessing the credit quality of the
acquired portfolio as well as the earnings potential and risk management of the
combined group.”
In Moody's opinion, “BankNordik has executed the integration of the newly
acquired branches as planned in H1 2010.” Moody's also notes, that “the
evaluation of the newly acquired loan book has not led to significant
additional provisions being taken in the bank's H1 2010 results.”
According to Moody's, “BankNordik's rating continues to be underpinned by the
bank's local franchise in the Faroe Islands where it reported a gross market
share of 43% at year-end 2009. The rating is also supported by the bank's
financial fundamentals, specifically its Tier-1 ratio, which, calculated under
Basel II, was 17.9% at end-June 2010; as well as by its large deposit base, as
reflected by the bank's deposit-to-loan ratio of 99% as of H1 2010.”
"Generally the banks' ratings have been under pressure during the financial
crises, and therefore it is satisfactory that Moody's has maintained
BankNordik's rating and provided a stable outlook. We take these actions as a
confirmation and appreciation of BankNordik's business strategy where focus is
on maintaining the bank's solvency, creating a balance between deposits and
loans and securing profit while generating growth," says Janus Petersen, CEO
Headquartered in Tórshavn, Faroe Islands, BankNordik reported total assets of
DKK 15 billion (EUR2 billion) at the end of June 2010, and the BankNordik Group
employed approximately 450 employees, whereof 250 were employed in the Faroe
Islands. In the first half of 2010 BankNordik had a pre-tax profit of DKK 458
million.
Further information:
Janus Petersen, CEO, phone (+298) 330 340
