The operating environment for banks in Iceland is improving, with falling private-sector leverage and improved access to foreign debt capital markets. In addition, we think Arion Bank's continued reduction in legacy equity positions is promoting further improvement in its capital. As a result, we are raising our long- and short-term ratings on Arion Bank to 'BBB/A-2' from 'BBB-/A-3'. The positive outlook reflects the potential for further capital improvements once the uncertainty of the ongoing sales process recedes. On Oct. 25, 2016, S&P Global Ratings raised its ratings on Iceland's Arion Bank to 'BBB/A-2' from 'BBB-/A-3'. The outlook is positive. We upgraded Arion primarily because of the reduced uncertainty and improving operating conditions for Iceland's banking sector (see "Various Positive Rating
