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UniCredit: Standard & Poor's affirms the ratings of the Group

UniCredit announces that today the rating agency Standard & Poor's affirmed the long term (A+) and short term (A-1) ratings assigned to UniCredit SpA and Bank Austria Creditanstalt AG.

Outlook is stable for both banks.

These rating actions follow the announcement that Bank Austria Creditanstalt AG, responsible within the UniCredit Group for commercial banking activities in CEE, has signed a share purchase agreement with Interpipe Group to acquire a 95% shareholding in Ukrsotsbank in Ukraine.

Attached the complete text of Standard & Poor's press release.




Milan, July 6, 2007

Contacts:

Media Relations:
Tel. +39 02 88628236; e-mail: mediarelations@unicreditgroup.eu
Investor Relations:
Tel. + 39 02 88628715; e-mail: investorrelations@unicreditgroup.eu



                             ATTACHMENT
         UniCredito And Bank Austria 'A+/A-1' Ratings Affirmed On Ukrsotsbank Purchase; Outlook Stable

Primary Credit Analyst: Alberto Buffa di Perrero, Milan, (39) 02-72111-205; alberto_buffadiperrero@standardandpoors.com
Secondary Credit Analyst: Bernd Ackermann, Frankfurt, (49) 69-33-999-153; bernd_ackermann@standardandpoors.com
Additional Contact: Financial Institutions Ratings Europe; FIG_Europe@standardandpoors.com

Rationale
On July 6, 2007, Standard & Poor's Ratings Services affirmed its 'A+' long-term and 'A-1' short-term counterparty credit ratings on Italian bank UniCredito Italiano SpA and its subsidiary Bank Austria Creditanstalt AG (BA). The outlook on both entities is stable.

The affirmations follow the announcement that BA, which is responsible within the UniCredito group for commercial banking activities in Central and Eastern Europe (CEE), has signed a share purchase agreement to acquire a majority shareholding in Ukrsotsbank OJSC (USB; B/Watch Pos/B), one of the largest banks in Ukraine. The deal is subject to regulatory authorizations. (For more information on Ukrsotsbank, see the related research update entitled "Ukrsotsbank 'B' L-T Rating Placed On Watch Positive On Share Purchase; 'B'S-T Rating Affirmed," published today on RatingsDirect).

As in the recent case of the announced purchase of ATF Bank in Kazakhstan, the affirmations reflect the overall moderate impact of this potential deal on the group's business and financial profiles. Standard & Poor's notes, however, that Unicredito's willingness to increase capital allocation in untested and expensive CEE/Commonwealth of Independent States (CIS) markets increases the managerial complexity of integrating banks in many different countries, and challenges management to reach adequate returns on investments. We will monitor the bank's ability to achieve its organizational and financial targets, including a core Tier 1 capital target of 6.8% (Basel 1 metrics) by year-end 2008 (5.9% at March 31, 2007).

The ratings on UniCredito continue to reflect the bank's strong business and geographic diversification in its core markets of Italy, Germany, and Austria; strategic presence in fast-growing economies in CEE; good integration track record and clear strategy; and satisfactory profitability at the Italian and CEE businesses. The ratings are constrained, however, by structurally weaker asset quality than that of peers, the still low profitability of the German and Austrian operations, only adequate capital ratios, and the operational complexity in creating a European banking group operating in a variety of regulatory and economic environments.
 
Outlook
The stable outlook reflects Standard & Poor's expectation that UniCredito will be able to maintain solid business and financial profiles. A material deterioration in credit risk, any need to undertake disproportionately high credit charges linked to legacy problems, or an inability to turn around the current low-profit businesses would put pressure on the current ratings. In addition, downward pressure could also arise if UniCredito were to undertake material acquisitions that would further increase managerial complexity or put the group's financial targets out of reach.
A successful turnaround and integration of the different businesses that would lead to a material increase in core profitability, capitalization, and asset quality, would position UniCredito for an upgrade.