Moody’s changes Norwegian banks to negative

Moody's Investors Service said it changed the outlook on the deposit and senior debt ratings of five regional savings banks Sparebanken Vest, SpareBank 1 SMN, SpareBank 1 Ostlandet, SpareBank 1 Nord-Norge and Sparebanken Sor to negative from stable.

The agency also maintained the negative outlook assigned to the deposit and debt ratings of DNB Bank ASA and SpareBank 1 SR-Bank ASA, and the stable outlook assigned to Kommunalbanken AS' (KBN) senior unsecured debt and issuer rating.

The deposit, senior debt, and issuer ratings of all of the listed banks, where applicable, as well as the subordinated debt rating of KBN, were affirmed reflecting the broadly unchanged standalone creditworthiness and liability structures of the banks.

Moody’s said the negative outlooks were triggered by the proposed legislation introduced to the Norwegian parliament on June 21 by the Ministry of Finance, to implement the European Union's bank recovery and resolution directive (BRRD) and the deposit guarantee scheme directive.

“If the law proposal is enacted, the rating agency expects that Norwegian banks will benefit from a lower probability of government support, which will exert downward pressure on the ratings,” Moody’s said in a news release.

“Today's rating action signals Moody's intention to more closely align its support assumptions for Norwegian banks to those of its European peers under BRRD resolution framework.”

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