Glitnir says sold loans to DnB to boost liquidity

STOCKHOLM, April 17 (Reuters) - Icelandic bank Glitnir GLB.IC said on Thursday it had sold non-core real-estate loans in Norway to DnB Nor DNBNOR.OL as part of its strategy to boost liquidity in the face of the global credit crunch.

The low-margin property loans were sold in February, Glitnir said, and were deemed non-strategic in terms of sector and clients.

"The sale of the loans strengthens the bank's comfortable liquidity position and is one of a series of successful initiatives the bank has taken ... in recent months," Bjorn Richard Johansen, head of corporate communication at Glitnir, said in an emailed comment.

Iceland's banks have been hard hit by global financial market turbulence. Worries have centred on whether they took on too much debt as they expanded overseas in the last few years.

On April 1, Fitch Ratings put Kaupthing KAUP.IC, Glitnir and Landsbanki LAIS.IC on negative watch, saying it may cut the three bank's ratings as risk of unexpected liquidity calls had risen. Moody's cut Icelandic banks' ratings in February.

While the international picture looks bleaker thanks to the credit crunch, domestic factors are not helping.

A sharp fall in the Icelandic crown, surging inflation and sky high interest rates have added to concerns about profitability.

The banks have refocused on core business and freeing up cash.

Glitnir said earlier this month it would exit its Luxembourg-based commercial property financing business, releasing as much as 1 billion euros ($1.6 billion) in liquidity. It closed its Danish operations earlier this year. (Editing by Paul Bolding)