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UniCredit: Fitch Ratings changes the ratings of the Group

UniCredito Italiano announces that today the rating agency Fitch downgraded the ratings assigned to UniCredito Italiano SpA to "A+" (from "AA-") for long-term debts and "F1" (from "F1+") for short-term debts. Outlook is stable. On the contrary Fitch upgraded to "1" (from "2") the Group's Support rating.

At the same time Fitch upgraded to "A" (from "A-") and "F1" (from "F2") the long and short-term ratings of Bayerische Hypo-und Vereinsbank and Bank Austria Creditanstalt, with stable outlook.

Following the placement of the aforementioned ratings on credit watch upon the announcement of the possible aggregation between UniCredit and HVB groups, such rating actions are attributable to the success of the purchase offer promoted by UniCredit on HVB Group.

UniCredit points out that the aforementioned Fitch Ratings' actions were expected, due to the different rating levels assigned by the agency to UniCredit and HVB groups before the announcement of the proposed business combination.

Attached the complete text of Fitch Ratings' press release with details of today's rating actions on UniCredit ed HVB groups' companies.

Contacts:
Media Relations:
Tel. +39 02 88628236; e-mail: Uci.Ufficiostampa@unicredit.it
Investor Relations:
Tel. + 39 02 88628715; e-mail: UCI-InvestorRelations@unicredit.it



ATTACHMENT

 

 

Fitch Downgrades UniCredito; Upgrades HVB

 


Fitch Ratings-London/Frankfurt/Milan-28 October 2005: Fitch Ratings has today downgraded UniCredito Italiano's ("UCI") ratings to Long-term 'A+' from 'AA-'(AA minus), Short-term 'F1' from 'F1+' and Individual 'B/C' from 'B' and removed them from Rating Watch Negative. A Stable Outlook is now in place. The bank's Support rating is upgraded to '1' from '2'. This follows the successful outcome of UCI's bid to acquire at least 65% of HVB's capital.

Fitch has also upgraded Bayerische Hypo-und Vereinsbank's ("HVB") ratings to Long-term 'A' from 'A-'(A minus), Short-term 'F1' from 'F2' and Individual 'C/D', from 'D' and removed them from Rating Watch Positive. A Stable Outlook is now in place. Its Support rating is affirmed at '1'. The agency has also taken rating actions on UCI's and HVB's subsidiaries and debt as listed below.

The downgrade on UCI reflects Fitch's view of the execution risk in integrating the entities involved in the transaction and the initially weaker regulatory capital ratios of the new group (likely to be, according to Fitch calculation, around core Tier 1 5%, total Tier 1 of 6.4% and total capital of nearly 10%% at end-2005 calculated under Basel regulations and IFRS). The downgrade also takes into account the merged group's vulnerability to Germany's sluggish economic performance. The upgrade in Support reflects the increased probability of support from the relevant authorities in case of need, given the merged bank's internationally systemic importance as one of the ten largest banks in Europe.

The upgrade of HVB reflects Fitch's recognition of the potential support flowing from UCI. In the first instance, this support would be operational but the agency also considers that in case of need, UCI would provide liquidity and solvency support to the extent permitted by the Italian regulatory authorities.

UCI will finance the acquisition by issuing new UCI shares for those of HVB. While the capital increase was approved by UCI's extraordinary shareholders' meeting in July 2005, the share exchange will occur in the second half of November 2005. UCI has also made an offer for the minority interests of Bank Austria Creditanstalt ("BACA") and will make an offer for the minority interests of Bank BPH SA ("BPH") in Poland once regulatory clearance is received. The exact mix of financing for the BACA and BPH offers is still uncertain but will involve variable amounts of UCI shares and cash. UCI's offer for BACA is due to close by mid-November 2005 while political and regulatory uncertainty means that no dates have yet been set for the BPH bid, although it is likely to be postponed to end-2005/early 2006. The outcome of these two bids is therefore likely to cause some limited movement in UCI's regulatory capital ratios. However, this has already been taken into account in today's downgrade. In the short term, the acquisition puts significant pressure on UCI's capital and Fitch will monitor closely capital generation, which on current projections is expected to be reasonably strong. However, any material unexpected deterioration in the group's capital could result in downward pressure on ratings.

The new bank will have total assets of EUR730 billion, equity in excess of EUR30bn and over 7,000 branches. It will be a market leader in Germany, Italy and Austria. By consolidating the two bank's existing extensive franchises in Central and Eastern Europe (CEE), it will become the dominant player across CEE.

UCI
Senior notes downgraded to Long-term 'A+' from 'AA-' (AA minus) and removed from RWN
Lower Tier 2 subordinated notes downgraded to Long-term 'A' from 'A+' and removed from RWN
Upper Tier 2 subordinated notes downgraded to Long-term 'A' from 'A+' and removed from RWN
Tier 1 notes downgraded to Long-term 'A' from 'A+' and removed from RWN
Tier 3 subordinated notes downgraded to Long-term 'A-' (A minus) from 'A' and removed from RWN

UCI subsidiaries
Bank Pekao of Poland affirmed at Long-term 'A' and Short-term 'F1' and removed from Rating Watch Evolving and RWN respectively. Stable Outlook is assigned. Individual and Support ratings are affirmed at 'C' and '1' respectively (see related statement published today on www fitchratings.com).

Bulgaria's Bulbank affirmed at Support '2'

Croatia's Zagrebacka Banka affirmed at Long-term 'BBB-'(BBB minus), Short-term 'F3', Individual 'C/D', and Support '2'. Outlook is Stable.

Czech Republic's Zivnostenska Banka affirmed at Support '1'

Unicredit Romania S.A. affirmed at Long-term 'BBB-'(BBB minus), Short-term 'F3', Individual 'D', Support '2'. Outlook is Stable

Slovakia's UniBanka affirmed at Support '1'

Turkey's Kocbank A.S. affirmed at Long-term 'BB-'(BB minus), Short-term 'B', Long-term Local currency 'BB+', Long-term National rating AA- (AA minus) (tur), Individual 'D', and Support '3'. Outlook is Stable.

Turkey's Yapi ve Kredi Bankasi affirmed at Long-term 'BB-'(BB minus), Short-term 'B', Long-term local currency 'BB+', Long-term National rating AA- (AA minus) (tur) and Support '3'. Outlook is Stable. Individual 'D/E' rating remains on RWP (see separate statements dated 4 February and 5 October 2005 on www fitchratings.com)

HVB
Senior notes upgraded to Long-term 'A' from 'A-' (A minus) and Short-term 'F1' from 'F2' and removed from RWP
Subordinated notes upgraded to Long-term 'A-' (A minus) from 'BBB+' and removed from RWP
Tier 1 notes upgraded to Long-term 'A-' from 'BBB-' (BBB minus) and removed from RWP

HVB subsidiaries

BACA of Austria upgraded to Long-term 'A' from 'A-' (A minus) and Short-term 'F1' from 'F2' and removed from RWP. Stable Outlook is assigned. Individual and Support ratings affirmed at 'B/C' and '1' respectively.

BPH of Poland upgraded to Support '1' from '2' and removed from RWP (see related statement published today on www fitchratings.com).

International Moscow Bank upgraded to Long-term 'BBB' from 'BB' and Short-term 'F3' from 'B' and removed from RWP. Stable Outlook is assigned. Support upgraded to '2' from '3'. Long-term local currency rating of 'BBB+' is assigned. Individual rating is affirmed at 'C/D' (see related statement published today on www fitchratings.com).

Croatia's HVB Splitska Banka ("HSB") affirmed at Support '2'. Fitch expects the Croatian regulator to force a sale of HSB on antitrust grounds. At the same time, it expects HSB to be acquired by a bank able to provide an equally strong level of support as BACA.