Moody's: Volatility ahead for Nordic, Baltic banks

The rated Nordic and Baltic banks have so far experienced limited impact from the ongoing market turmoil, but increased volatility in earnings is likely from the first quarter of 2008 onwards due to mark-to-market losses on their securities portfolios and increased stress on asset quality, Moody's Investors Service said in a new report.

Moody's said it rates 56 banks across the Nordic-Baltic region and most of these ratings have remained stable over the past nine months, with only nine ratings having changed or/and experienced an outlook change in this period.

The agency said it views the overall rating outlook for the eight banking systems in the region as broadly stable - only the Icelandic and Estonian systems have a negative outlook. This reflects the banks' generally solid core businesses within the highly concentrated banking systems with a relatively high level of foreign ownership, Moody's said.

The Nordic banks continue to enjoy strong operating environments but conditions are more challenging for the Baltic banks, the agency said. However, for all eight systems Moody's said it expects the operating environments will be less benign going forward.

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