Fitch Ratings puts Danske Bank on negative watch list

Denmark's Danske Bank is placed on a Rating Watch Negative, pending a possible downgrade, the Fitch credit ratings agency said Friday. The agency is monitoring Danske Bank as it considers maintaining or downgrading the bank's current A+ rating, Fitch said in a report. "The rating actions on Danske Bank particularly reflect the uncertainty in the development of the Danish and Irish economies," Fitch said. It added Danske Bank's earning capacity could suffer from asset quality erosion in Denmark and Ireland. However, Danske Bank's high rating continues to be supported by its strong franchise in the Nordic region, its improved capital base and diversified earnings, Fitch said. The Rating Watch Negative has also affected another 12 international banks and financial institutions and comes as part of a Fitch review of major global and European banks. Fitch said it believes the affected institutions have business models that are especially sensitive to the stiff challenges facing financial markets, particularly in the single-currency euro area. It added that large banks have been seen to fail in recent times, but did not cite specific examples. A lower credit rating usually makes it harder for a bank to raise capital on international financial markets. In turn, this makes it dearer for customers to borrow from the bank.