The Icelandic banking system was given the lowest rating possible for a developed state at the international agency Fitch Ratings this week. Iceland and Vietnam are in the same category but Tunisia and Ecuador rank higher than Iceland.
Landsbanki, one of Iceland’s three largest banks that collapsed last year. Copyright: Icelandic Photo Agency.
Fitch releases two reports every year, evaluating the stability of the banking systems in different countries. Usually, industrial nations are rated with a B or C. No state was given an A this time but Australia, Canada and Hong Kong earned a B, RÚV reports.
The US and the UK are rated with C. Ireland, Belgium and Iceland rank at the bottom among developed countries; the first two were given a D, while Iceland received the lowest rate possible for a developed country: E.
Before the banking collapse of October 2008, Fitch rated Iceland with a C but the collapse made it plummet down two categories.
The banking systems of countries in the E category are considered extremely weak, a statement from Fitch explained.
A slight increase in pressure can cause a wide-reaching crisis, which burns up the banking system’s equity, and require financial support from the government or shareholders.