Iceland

Denmark I Estonia I Finland I Iceland I Latvia I Lithuania I Norway I Sweden One banker says that the performance of Glitnir’s CDS this year relative to its local competitors – Kaupthing and Landsbanki – was a good barometer of the strength of its franchise as well as its management during the crisis that hit the Icelandic banking system in the first quarter of 2006. That performance also reflected the widespread belief that the bank previously known as Islandsbanki has a business model that is more conducive to sustainable profitability than its peers. And with net profits tripling in the first quarter of 2006 and return on equity reaching 42%, that perception appears to be warranted. Affirming the bank’s A– long-term rating at the end of March, Standard & Poor’s forecast that Glitnir would “maintain profitability at comfortable levels, even in a less favourable economic environment of higher loan losses and lower financial gains.” When S&P changed its outlook on Iceland from stable to negative at the start of June, the agency was quick to advise that the revision would have no impact on Glitnir’s rating.