Danish Banks on S&P Watchlist

29-07-2010 09:52 Both Danske Bank and Nykredit risk having their credit rating downgraded by the credit rating agency Standard & Poor's, writes Berlingske Tidende.  At the same time, the US-based agency believes that many of Europe’s larger banks should also be included in this category

Standard & Poor's has placed half of Europe's 50 largest banks, including the Danish financial institutions, on a list of banks that could have their credit rating reduced. Its concerns mainly surround the banks' ability to earn income and service their loans in the future. According to credit rating agency, the ability to access additional state aid in the future is an important factor in a bank’s rating.

 "We see a mixed, but still predominantly negative outlook for European banks' credit quality in 2010," said Standard & Poor's credit analyst Miguel Pintado. "Several factors will likely continue to influence our ratings on European banking groups: government support, which is a key factor, in our view; asset quality and its impact on earnings capacity; as well as funding and capitalization strategies, owing to the changing regulatory landscape and the impact of reforms."