SOURCE: Glitnir

August 30, 2006 05:36 ET

Fitch with good rating of Glitnir: Fitch Ratings Affirms Glitnir Bank at 'A'; Outlook Stable

REYKJAVIK, ICELAND -- (MARKET WIRE) -- August 30, 2006 --


Reykjavik, 30 August 2006 - Fitch Ratings has today affirmed Glitnir Bank's ratings at 'A'; outlook stable. Fitch Ratings announced that Glitnir Bank at Issuer Default 'A', Short-term 'F1', Individual 'B/C' and Support '2'. The Outlook on the Issuer Default rating is Stable. According to the announcement, the ratings reflect the bank's good underlying profitability and diversified revenue streams, its sound asset quality and its good capitalisation. They also take into account its reliance on wholesale funding, the integration risks linked to recent acquisitions and its exposure to the small Icelandic economy and volatile Icelandic Krona.

Fitch states that Glitnir Bank's risk profile has changed considerably over the past three years; the exit from the insurance business Sjova-Almennar, acquired in Q403, was completed in May 2006 with the sale of its remaining 33.4% stake. At the same time, the bank has managed to build up a second home market in Norway through a series of acquisitions, the main one being that of BNbank, a commercial bank specialised in commercial and residential property financing. As a result of this strategy, Norway represented around 40% of the group's loan exposure at end-June 2006, a level similar to the group's exposure to Iceland.

Bjarni Ármannsson, CEO, of Glitnir says the Fitch Ratings affirmation is an important step for the bank:

"Last week Glitnir announced that the bank had liquid assets to cover all refinancing needs for 2007 and this announcement from Fitch is important for the bank going forward. For the past years, Glitnir Bank has executed a very clear strategy and international ratings agencies obviously agree that this is one of the main strengths of the Bank. We have built up Norway as one of our home markets with six acquisitions and at the same time grown organically internationally. There we have had primary focus on segments where the bank has special expertise. Glitnir Bank has emphasized asset quality, strong capitalisation, reporting transparency and good communication to the market. This clear strategy, together with the great work of our employees has resulted in the fact that Glitnir Bank now enjoys strong ratings from all the three major credit rating agencies."

According to Fitch, the build-up of a second home market in Norway has enabled Glitnir Bank to improve the sustainability of its income streams. This strategy offers strong benefits in terms of diversification of revenues, given the low correlation between the performances of the Icelandic and Norwegian economies. Profitability in 2005 and H106 was supported by favourable market conditions, in particular in capital market activities and corporate and investment banking. However, the bank did not benefit from financial gains to the same extent as those of its Icelandic peers, having reduced its appetite for market risk at an earlier stage than they did. The increased cost of funding, caused in particular by concerns linked to macro-economic imbalances in Iceland, is likely to result in more selective asset growth. The bank's efforts to diversify its investor base and its sound liquidity management have helped it mitigate its exposure to negative market sentiment, although access to funding, in line with its Icelandic peers, bears a higher price. Capitalisation is good - a necessity given turbulent market conditions and the exposure to a volatile domestic currency.

FOR INTERNATIONAL INVESTORS, ANALYSTS AND MEDIA SERVICE:

INTERNATIONAL TELEPHONE CONFERENCE

Glitnir will host a telephone conference in English at 12.30 PM Iceland time, 2.30 PM Stockholm/Oslo and 1.30 PM UK time today Wednesday August 30. Bjarni Ármannsson, CEO, will give his comments to the Fitch Rating and answer questions. To participate, call + 44 (0)20 7162 0125 (UK), +47-215 63122 (Norway) or + 1-334 323 6203 (USA), no later than ten minutes in advance. Bjarni Ármannsson, CEO, Frank O. Reite, Managing director of Glitnir Markets and responsible for Glitnir's operations in Norway and Bjørn Richard Johansen, International Communication and Public Affairs Director, will participate.

PRESS BRIEFING IN STOCKHOLM TODAY:

BJARNI ÁRMANNSSON VISITS FISCHER PARTNERS IN STOCKHOLM, SWEDEN

For the press located in Stockholm - Glitnir will host a press briefing at 13.00 PM Iceland time, 3.00 PM Stockholm/Oslo and 2.00 PM UK time today Wednesday August 30. Bjarni Ármannsson, CEO, will give his comments to the Fitch Rating and answer questions. Address: The Fischer Partners office, Hovslagargatan 5, Stockholm. Bjarni Ármannsson, CEO, Frank O. Reite, Managing director of Glitnir Markets and responsible for Glitnir's operations in Norway /Sweden and Bjørn Richard Johansen, International Communication and Public Affairs Director, will participate.

For more information:

Bjarni Ármannsson, CEO, phone: office +354 440 4005 or mobile +354 844 4002, e-mail: bjarni.armannsson@glitnir.is

Tómas Kristjánsson, CFO, phone: office +354 440 4656 or mobile +354 844 4656, e-mail: tomas.kristjansson@glitnir.is

Bjørn Richard Johansen, International Communication and Public Affairs Director, mobile +47-47 800 100, e-mail: brj@glitnir.no

For photos: e-mail to akj@glitnir.no

About Glitnir

Glitnir is a leading financial group that offers universal banking. Services include retail, corporate and investment banking, stock trade and capital management. Glitnir is the sole owner of banks in Luxembourg (Glitnir Bank Luxembourg S.A) and Norway (BNbank and Glitnir bank, Glitnir Securities and Glitnir Kapitalforvaltning, the factoring company Glitnir Factoring, as well as 50.1 percent of Union Gruppen). Glitnir's subsidiary BNbank in Norway recently entered into an agreement to acquire 45 per cent of the shares in Norsk Privatøkonomi ASA. Norsk Privatøkonomi ASA is an independent financial advisory company with 12 branches in key areas of Norway (governmental approval pending in Norway). Glitnir own the leading Swedish brokerage firm Fischer Partners. The bank has a branch in London and in Copenhagen, Denmark. Glitnir has an office in Halifax, Canada. Glitnir plans to open an office in Shanghai, China in 2006. Glitnir is listed on the Icelandic Stock Exchange. Glitnir recently announced record profits, with a return on equity of 45.5 percent for the first half year of 2006 - making second quarter 2006 the best ever in the bank's history. For further information, go to www.glitnirbank.com

Fitch with good rating of Glitnir:

http://hugin.info/133924/R/1072297/183386.pdf

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