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Moody's cuts Kaupthing
Moody's Investors Service said it downgraded Kaupthing Bank hf.'s long-term foreign- and local-currency deposit ratings to A1 from Aa3 and affirmed the A1/C+ ratings of subsidiary FIH Erhvervsbank A/S. The Prime-1 short-term ratings were also affirmed.
The outlook is stable.
The actions conclude the review for downgrade that began in August when Kaupthing announced its plan to acquire NIBC Bank NV (Baa1/C-). On Jan. 30, Kaupthing and NIBC announced their decision not to proceed with the acquisition.
Moody's said the downgrade reflects concern about Kaupthing's asset quality, namely its high single-name exposures and related-party lending, despite the bank's 2007 results showing a good asset quality performance.
"Although Kaupthing has historically reported high related-party exposures, the weakened Icelandic and global credit environment has recently increased the risk profile of such lending," Kimmo Rama, Moody's analyst, said in a written statement.
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