S&P may cut Glitnir rating on earnings pressure

LONDON, March 20 (Reuters) - Standard & Poor's said on Thursday it may cut Icelandic bank Glitnir's GLB.IC A- long-term ratings due to increased pressure on its earnings stemming from turbulent markets.

S&P also affirmed Glitnir's short-term A-2 ratings.

"The CreditWatch placement reflects the heightened pressure on Glitnir's earnings capacity stemming from the turbulence in capital markets and investment banking," S&P credit analyst Miguel Pintado said in a statement.

"It also reflects more difficult funding and liquidity conditions across markets, and the potential effect on asset quality of slowing economic activity in several of the bank's markets," Pintado said.

The news did little to move Glitnir's credit default swaps.

By 1200 GMT, five-year CDS on Glitnir were unchanged at 750 basis points, a trader said. The price means it costs 750,000 euros a year to insure 10 million euros of the bank's debt against default.

S&P rates Glitnir lower than the other two big ratings agencies.

Moody's Investors Service downgraded Glitnir two notches to A2 from Aa3 late last month, and assigned a stable ratings outlook. Fitch Ratings currently rates Glitnir at A with a stable outlook. (Reporting by Maya Thatcher; Editing by Rory Channing)