...Uncertainty related to eventual sale and change from 100% government ownership in the next few years. Outlook: Stable The stable outlook on Islandsbanki reflects that we expect the bank's risk-adjusted capital (RAC) ratio to remain sustainably above 15%. This is despite the bank preparing for an eventual sale or IPO over the next two years, and optimizing its capital base by distributing large dividend payouts and issuing capital instruments. We expect the bank's asset quality to improve only marginally from current levels, remaining in line with that of domestic peers. The stable outlook further balances our view of the still-supportive economic development in Iceland with the relatively concentrated and volatile nature of the economy and increasing credit risks. We could take a negative rating action if Islandsbanki's RAC ratio declined more than we expected, or if its loan asset quality deteriorated materially, requiring significant and unexpected additional provisioning. This could...
