Ratings agency Moody’s has today announced ratings actions concerning a number of banks in the Nordic region. Senior debt and deposit ratings of Norwegian DNB Bank ASA, part of DNB ASA (OSE: DNB) were downgraded to A1from Aa3 couple with downgrades on other ratings as well with a stable outlook. This reflects reliance on market funding and exposures to volatile assets such as real estate sector and shipping and possible pressure on earnings from higher liquidity requirements. The decline was mitigated due to likely system support in the event of problems and stable domestic environment.
Rating actions on five Swedish banking groups resulted in a downgrade of long-term debt and deposit ratings for Nordea Bank Ab (OMX: NDA, OMXH: NDA1V) and Svenska Handelsbanken (OMX: SHB A) both by one notch from Aa3 and that of farm and forest holder member owned specialised agricultural lender Landshypotek AB by two notches. The debt and deposit ratings of Skandinaviska Enskilda Banken's SEB (OMX: SEB A) and Swedbank (OMX: SWED A) were maintained at A1 and A2 respectively. All the ratings carry a stable outlook. The challenges faced by the sector as given by Moody’s are comparatively high reliance on wholesale funding, modest profits and risks to assets quality. Nonetheless the commendable performance of the Swedish economy and the relative strength of the banks is recognized.
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