Heritable put on negative watch by Fitch

Heritable Bank and its Icelandic parent group Landsbanki have both been placed on ratings watch negative by Fitch Ratings.

Landsbanki was one of three Icelandic banks placed on watch, and it applies to the group’s issuer default ratings and debt ratings.

A release says: “While Fitch believes that the three banks’ liquidity is currently sufficient, diminishing confidence in the sector has increased the risk of unanticipated calls on liquidity while severely restricting funding options.

“Moreover, the recent sharp depreciation of the Icelandic Krona and the heightened risk of a ’hard landing’ for the Icelandic economy are likely to adversely impact asset quality and performance.”

But Fitch says it expects to resolve the watches on the banks in the coming weeks, following a more thorough review of the banks’ financial and risk profiles.

The ratings agency believes that the banks remain liquid, and have benefited from efforts made to diversify funding following an Icelandic banking crisis in early 2006.

It’s review of the banks over the coming weeks will focus on the extent to which they are coping with the effects of a weakening external environment and their ability to withstand a deterioration in the domestic environment.

Today’s rating action considers the banks’ increasingly restricted access to funding and potential for additional pressures on liquidity. This has been compounded by the wider problems in the global financial marke