...Outlook: Stable The stable outlook on Icelandic bank Islandsbanki hf reflects Standard & Poor's Ratings Services' projection that the risk-adjusted capital (RAC) ratio will likely be at about 12.5%-13.0% by the end of 2017, given the government's likely attempts to complete a sale of the bank while extracting some of the capital currently above regulatory limits. We do not see the government's ownership as strategic and believe that Islandsbanki will be up for sale from the Icelandic government within two years, at which time we believe that capital levels will be reduced to make the bank more attractive to a potential buyer. Our stable outlook also reflects our assumption that Islandsbanki will retain strong capital and liquidity buffers, even after expected deposit outflows owing to the relaxation of Iceland's capital controls over the coming months. We do not expect the uncertainty of the bank's future ownership to weaken its stand-alone credit profile (SACP), but it could affect the...
