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Fitch acts on Nordic banking groups amid coronavirus pandemic

Fitch Ratings on March 31 took various ratings actions on nine Nordic banking groups over uncertainties due to the coronavirus crisis, driven by the rating agency's assessment that the risks to the credit profiles of the banks are skewed to the downside.

The agency revised to negative from stable the outlooks on Denmark's Nykredit Realkredit A/S and unit Nykredit Bank A/S; Sweden-based Landshypotek Bank AB; Norwegian lenders SpareBank 1 SR-Bank ASA, SpareBank 1 SMN and SpareBank 1 Nord-Norge; and Danske Bank A/S unit Realkredit Danmark A/S.

Fitch said the outlook revisions reflect its view that the economic fallout from the pandemic represents a medium-term risk to Nykredit Realkredit's and Realkredit Danmark's ratings, while the outbreak is assessed to have a modest immediate impact on the other banks' ratings.

Fitch placed on Rating Watch Negative the AA long-term issuer default rating and "aa" viability rating of Sweden-based Svenska Handelsbanken AB (publ), as well as the A long-term issuer default rating, "a" viability rating and A+(dcr) derivative counterparty rating of Denmark-based Danske Bank.

A similar action was also taken on the AA-/F1+ long- and short-term issuer default ratings and "aa-" viability rating of Finland-based Nordea Bank Abp and Swedish lender Skandinaviska Enskilda Banken AB, and the AA long-term issuer default ratings of Handelsbanken units Stadshypotek AB (publ) and U.K.-based Handelsbanken PLC.

The agency said the ratings were placed on Rating Watch because the economic fallout from the crisis represents a near-term risk to the said banks' ratings, since they enter the economic downturn with only moderate rating headroom.

READ MORE: Sign up for our weekly coronavirus newsletter here, and read our latest coverage on the crisis here.

Fitch affirmed the ratings of the lenders, including the A/F1 long-and short-term issuer default ratings and "a" viability ratings of Nykredit Realkredit, Nykredit Bank, Landshypotek Bank and SpareBank 1 Nord Norge; the A-/F2 long- and short-term issuer default ratings and "a-" viability ratings of SpareBank 1 SR-Bank and SpareBank 1 SMN; the F1+ short-term issuer default rating of Handelsbanken; the F1 short-term issuer default rating of Danske Bank; and the A long-term issuer default rating and "a" viability rating of Realkredit Danmark.

The agency also assigned AA+/F1+ long- and short-term deposit ratings to Handelsbanken and AA/F1+ long- and short-term deposit ratings to both Nordea and SEB.

The agency upgraded Handelsbanken's derivative counterparty rating to AA+(dcr) from AA(dcr), while Nordea's and SEB's derivative counterparty ratings were upgraded to AA(dcr) from AA-(dcr).