February 26, 2007 / 1:26 PM / 11 years ago

Nordic, Iceland bank shares up on Moody's

STOCKHOLM, Feb 26 (Reuters) - Shares in Nordic and Icelandic banking groups rose on Monday after rating agency Moody’s made a raft of rating changes over the weekend, raising its rating on most banks’ long-term deposits and senior debt.

The DJ Stoxx Nordic banking index .TBNKF was up 0.7 percent at 731.9 at 1245 GMT.

Moody’s changes result from the new methodology for default analysis, which takes into account potential sources of external support for banks, for instance the government, and its updated bank financial strength rating methodology.

For Nordea (NDA.ST), the region’s biggest bank, Moody’s raised its rating on the firm’s senior debt and long-term foreign currency deposits to Aaa, Moody’s highest rating. The rating agency also raised long-term deposit and senior debt ratings for Denmark’s Danske Bank (DANSKE.CO), Norway’s DnB NOR DNBNOR.OL to Aaa.

Iceland’s Kaupthing KAUP.IC, Glitnir GLB.IC and Landsbanki LAIS.IC all got Aaa ratings for long-term deposits and senior debt. Their shares were the big winners on the day.

Kaupthing shares were up 2.9 percent at 1,033 Iceland crowns

($15.70) while Glitnir was up 3.3 percent at 28.2 crowns and Landsbanki up 3.1 percent at 32.9 crowns.

Sweden’s SEB (SEBa.ST) and Swedbank (SWEDa.ST) had their long-term deposit ratings and senior debt ratings raised to Aa1, the second highest grade.

However, the rating agency cut Danske’s financial strength rating to B from A- and SEB’s to B- from B. It also cut the financial strength rating of Handelsbanken (SHBa.ST) to B from A- and DnB NOR to B- from B.

However some analysts played down the significance of the changes.

    “This is just a change in methodology. The banks are no better and no worse than they were on Friday,” said Kim Bergoe at Fox-Pitt, Kelton.

    Moody’s bank financial strength rating is a measure of how likely the bank is to require support from third parties in order to avoid default.

    Shares in SEB were up 0.2 percent. Swedbank, hurt recently by worries about the Baltic economies, was down 0.9 percent at 263.50 crowns and Handelsbanken was up 1.7 percent at 214 crowns.

    ((Editing by David Holmes; Stockholm Newsroom, tel: +46-8-700 1017, e-mail: stockholm.newsroom@reuters.com))

    ($1=65.80 Iceland Krona) Keywords: NORDIC BANKS/

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