Aktia Bank PLC

Well-established local retail franchise in Finland. Strong projected capitalization underpinned by sound earnings capacity. Focus on low-risk collateralized lending to retail clients and small and midsize enterprises. Concentration risk in loan book, due to focus mainly on residential mortgage lending in Finland. Limited geographic, business, and earnings diversification. Reliance on wholesale funding market as covered bond issuer. S&P Global Ratings' stable outlook on Aktia Bank reflects our view that the bank will continue to maintain its market position as a well-established local retail franchise in Finland. The outlook also reflects our expectation that the bank's capitalization will be supported by sound earnings capacity over the next 24 months. The improving economic conditions in Finland further underpin this view. We could

...Reliance on wholesale funding market as covered bond issuer. Outlook: Stable S&P Global Ratings' stable outlook on Aktia Bank reflects our view that the bank will continue to maintain its market position as a well-established local retail franchise in Finland. The outlook also reflects our expectation that the bank's capitalization will be supported by sound earnings capacity over the next 24 months. The improving economic conditions in Finland further underpin this view. We could take a negative rating action if we saw Aktia's position weaken, such that the bank's profitability and market shares decline. The termination of cooperation with independent local savings banks and co-operative banks has had a temporary hurt Aktia's risk-adjusted capital (RAC) ratio. If we saw the bank's lending growth were to lead to a lower projected RAC ratio we could also take a negative rating action, however we do not believe this would lead to a two-notch downgrade given Aktia's potential additional loss-absorbing...

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