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Credit Opinion: Banco BMG S.A. Global Credit Research - 13 Dec 2010

Belo Horizonte, Brazil

Ratings Category

Outlook Bank Deposits NSR Bank Deposits -Dom Curr Bank Financial Strength Senior Unsecured Subordinate Other Short Term

Moody's Rating

Negative Ba2/NP Aa3.br/BR-1 D Ba2 Ba3 NP

Contacts Analyst

Ceres Lisboa/Sao Paulo Alexandre Albuquerque/Sao Paulo M. Celina Vansetti/New York

Phone

55.11.3043.7300 1.212.553.1653

Key Indicators Banco BMG S.A. (Consolidated Financials)[1]

[2]9-10 [2]12-09 [2]12-08 [3]12-07 [3]12-06 Total Assets (BRL billion) Tangible Common Equity (BRL billion) Total Assets (USD billion) Tangible Common Equity (USD billion) PPI / Avg RWA Net Income / Avg RWA (Market Funds - Liquid Assets) / Total Assets Core Deposits / Average Gross Loans Tier 1 Ratio Tangible Common Equity / RWA Cost / Income Ratio Problem Loans / Gross Loans Problem Loans / (Equity + Loan Loss Reserves) Source: Moody's

Avg.

[4]24.15 [4]22.85 [4]31.53 [4]30.17 [5]6.81% [5]2.39% [6]14.71% [6]46.85% [5]12.80% [5]12.41% [6]54.31% [6]5.64% [6]13.57%

10.97 2.25 6.48 1.33 8.35% 3.41% 0.26% 65.98% 11.11% 11.06% 47.52% 5.69% 16.03%

10.26 2.14 5.88 1.23 8.85% 3.46% 8.02% 70.08% 11.71% 11.12% 47.14% 6.27% 15.46%

7.19 1.98 3.08 0.85 3.24% 0.30% 26.32% 27.56% 15.59% 15.04% 71.92% 7.68% 14.09%

6.60 1.29 3.71 0.73 9.88% 5.08% 13.49% 44.24% 12.29% 10.36% 53.31% 3.93% 10.86%

4.62 0.99 2.16 0.46 7.27% 3.49% 25.45% 26.36% 13.32% 13.13% 51.67% 4.62% 11.44%

[1] All ratios are adjusted using Moody's standard adjustments [2] Basel II; LOCAL GAAP [3] Basel I; LOCAL GAAP [4] Compound Annual Growth Rate based on LOCAL GAAP reporting periods [5] Basel II & LOCAL GAAP reporting periods have been used for average calculation [6] LOCAL GAAP reporting periods have been used for average calculation

Opinion RECENT CREDIT DEVELOPMENTS

On December 9th, 2010, Moody's changed the outlook for all rating assigned to Banco BMG S.A. (BMG) to negative from stable. The action reflects Moody's view that BMG's specialized business model may be negatively affected over the next twelve to eighteen months by the Brazilian Central Bank's recently announced macro-prudential measures, primarily by the increase of capital allocation for long-term payroll loans. The new credit dynamics should require BMG to adjust its loan origination flow during a period of tightened liquidity and take on higher funding costs as they move further up within the financial system, which may affect business dynamics, and thus profitability metrics going forward.

SUMMARY RATING RATIONALE

Moody's assigns a bank financial strength rating of D for Banco BMG S.A. (BMG), with a negative outlook. The rating reflects a single product franchise with a limited scope, challenging BMG's recurring earnings generation capability, growth prospects and profitability levels. The bank's dependence on institutional funding has been partially offset by its ability to sell highly liquid loans, but in a scenario of tight liquidity,

the bank's financial flexibility tends to decline. Regulatory measures were taken to balance the credit markets in the beginning of 2009 that prioritized the payroll lending origination business, boosting BMG's 2009 loan origination volumes and performance, which may not be sustainable in the near-term . We acknowledge that BMG has a traditional lending franchise, and among the privately-owned participants, the bank has a leading operation in its core business of payroll lending. We also notice that management had already been anticipating marginal growth for this product in the beginning fo 2008 and, in response, had scaled down its payroll lending operations. However, while the bank's expertise in other retail lending business has been important, as risk aversion increased at the end of 2008, management decided to focus the operation solely to the payroll related loans, disconneting the auto finance, middle market and private payroll lending platforms, a way to preserve efficiency, liquidity and asset quality in a sustainable way. Moody's also recognizes management's proven capability and track record during past economic downturns of making the necessary adjustments, important as the bank now faces an expected scenario of economic deceleration and restrictive credit and funding. The negative outlook is an indication that BMG's financial flexibility is likely to remain challenged. However, BMG appears prepared to manage future refinancing needs with its cash generation, which benefits from a stable stream of credit inflow. Moody's believes that the bank's asset quality indicators are adequate as they are supported by its conservative provisioning policies and good quality controls, as well as by the low risk nature of its loan portfolio, which is 75% made of payroll loans. The local currency deposit rating is Ba2. Moody's has ascribed no systemic support, given the light footprint of the bank in the deposit market, and as per Moody's assessment that Brazil is a low-support country. We have also assigned it a Aa3.br long-term deposit rating on the national scale for Brazil.

Rating Drivers

- Essentially a mono-product franchise with significant penetration rates in payroll-linked lending segment - Non-branch-based operating structure provides business flexibility, though competitive pressures influence efficiency - Superior asset quality with a portfolio highly concentrated on low-risk and highly liquid payroll loans - Future profitability dynamics to reflect changes in accounting of credit sales which also drags down capitalization - Limited on-balance sheet capacity offset by active securitization: credit sales are more than 70% of funding base - Highly exposed to regulatory changes in payroll-lending

Rating Outlook

The outlook was revised to negative in December 2010, reflecting BMG's challenging funding scenario and the sustainability of the financial fundamentals as the bank aligns its operations to the new dynamics of capital allocation for long-term payroll loans.

What Could Change the Rating - Up

Rating lift would be associated with the bank's ability to improve its funding profile to a sustainable structure, while reducing the tenor mismatch between assets and liabilities. Both diversification of funding alternatives and lengthening in tenors would also be positive developments. Predictable profitability ratios would indicate management's ability to expand operations within its defined strategy, while remaining successful amid increasing competition and potentially lower interest rates.

What Could Change the Rating - Down

BMG's ratings could be pressured by the following factors: (1) a slowdown in economic activity coupled with (2) adverse funding conditions that could further limit the bank's loan origination and undermine the bank's profitability ratios; and (3) a significant weakening in the bank's market position as a result of competition with largest retail banks. (4) Failure to sustain adequate capital levels and (5) regulatory changes in payroll lending segment could have significant implications to the bank's business profile. (6) A shift toward a riskier mix through, for example, greater risk concentration or less prudent lending criteria could lead to a downgrade.

Recent Results

In the 3Q10, BMG reported total consolidated assets of R$10.97 billion under local GAAP, an increase of roughly 19.8% in 12-month period. Record net income of R$498.6 million in the period resulted from high origination volumes and steady loan sale dynamics that allows the bank to recognize proceeds from loans sold with recourse, which accounted for 55.3% of total credit income (54.9% in 2009). Total on and off-balance sheet portfolio amounted to R$23.3 billion in 3Q10, up by 28.6% in 12 months, of which 89.2% are made of payroll deductible loans, 3.2% by vehicle finances and 7.6% by secured SME credits. The asset quality ratios were maintained quite steady when we add the outstanding balance of loans that are ceded to third parties to which BMG maintains the credit risk responsibility. In the 3Q10, the NPLs ratio reduced to 2.2% from 2.6% in 2009. BMG reported a BIS ratio of 15.7%, boosted compared to 2009 levels as the subordinated notes issued in November 2009 of US$ 300 million were qualified as Tier II instruments. In August 2010, BMG issued another US$250 million subordinated note due in 2020, expected to enhance total BIS ratio roughly to 20% as it gets regulatory approval. We also note that the changes in accounting rules on credit sales expected for 2011 were postponed by regulators for 2012, when capital ratio should be hit by the accrual of earnings from loan sales. However, effective for loan origination since December 6th, the higher capital allocation for loans maturing over 36 months (from 75% to 150%) also creates tension around capital adequacy levels from July 2011 onwards. In October 2010, BMG announced the acquisition of consumer finance company GE Money Brazil, a subsidiary of Banco GE Capital S.A.. BMG is expected to leverage payroll lending business from GE's more than 3,000 points of services. The announcement also mention potential incursion to services already offered by GE such as credit card, personal loans, store CDC, where BMG had past experience. The transaction is still subject to the regulatory approvals.

Bank Financial Strength Rating

Moody's assigns a D BFSR to Banco BMG, which reflects the bank's prominent position in retiree payroll lending (INSS), where it has a nearly 10% market share and in loans to public servants, where BMG leads with 18% market share among the private-sector players. Despite past moves towards diversification, which were positive credit factors, the bank definitively focused on its core business, the payroll lending segment, currently challenged by a slowdown in loan origination volumes and by the tighten liquidity environment that puts pressure on its business model. BMG has a recognized and consolidated brand in payroll lending, and leverages from its expertise in the consumer lending business. Further product diversification can come in the form of joint ventures with powerful market players; these would complement the bank's operations without the bank losing its focus. The D BFSR indicates BMG's reliance on wholesale funding and limited financial flexibility as well as its restricted capital structure. Fast loan growth has been supported over the past six years by credit sales agreements and loan securitizations. The low credit risk associated with payroll lending increases the marketability of BMG's assets. The scorecard-implied rating is C-, based on average metrics of fiscal years 2007, 2008 and 2009. For those qualitative factors that make up 70% of the weighting, BMG scores a D+, and for the quantitative factors (30% of the total score) the bank has a C+. Sound financial figures support Moody's BFSR scorecard assessment, especially the robust performance achieved over the last five years. Securitization still boosts bottom-line results, bringing some unpredictability to the performance. Capital replenishment will be key to sustaining loan growth and should improve the bank's loan retention capacity, improving earnings recurrence and predictability. Partnerships or joint ventures may be an alternate way to enhance its proprietary capacity to sustain growth, adding value to BMG's operations. The high scores awarded to Brazil's regulatory environment also boost the scorecard-implied ratings. Qualitative Rating Factors (70% weighting) Factor 1: Franchise Value Trend: Neutral Score for Franchise Value is D, considering the concentrated operation in one single product line, the payroll-deductible loan, which accounts for the bulk of the bank's portfolio breakdown and roughly 90% of the bank's core earnings, with a large earnings portion coming through the earnings anticipated from securitization (55% of credit income in 3Q10 up from 39% in 2008). On the other hand, we should highlight that among the privately-held banks in Brazil, BMG is a leader in the public payroll lending segment; this is a segment that has been mainly responsible for credit intermediation growth in Brazil since 2004, but which has recently shown signs of maturing. Despite its valuable and defensible position, BMG still lags in business diversification, which translates into an E score on `earnings diversification' and `earnings stability'. Leveraging on its expertise in the 80's and 90's, BMG re-entered vehicle financing and commercial lending to SMEs, improving the product mix. In 2008, car finance reached R$2.3 billion, accounting for 16% of total credit book in the period, today down from 3% as the bank exited the platform since the end of 2008. Also relatively important is the middle market portfolio, which is mainly based on secured lending activities, representing around 8% of total loans in September 2010. The third-party distribution model has been proving effective, with BMG successfully managing the structure that efficiently leverages this delivery scale. Conversely, such a distribution profile has proven to affect costs in times of intensified competition. Banks pay fat commissions in this segment: fees has ranged 10% to 20% over the last five years, and they are highly vulnerable to competition. Funding dynamics is a key challenge in this business model given the long tenor of the asset. As of today, origination volumes is around R$550 million/months, gradually down over the last three quarters. Following the announcement of the Central Bank on December 3rd, increasing capital allocation to long-term consumer loans, including the payroll credits, the scenario for BMG's business model is challenging as the bank manages the new loan origination dynamics and tighten funding costs. Therefore, modest growth is expected, if any, pressuring down the value of BMG's franchise. Factor 2: Risk Positioning Trend: Neutral BMG receives an E on 'Risk Positioning'. This reflects the weaker scores on corporate governance for its family control and limited board independence. Professionals are responsible for key areas of the bank, but shareholders still enjoy key positions in the day-to-day decisionmaking process. In terms of risk controls, the D grade on the scorecard acknowledges major control issues that hit governance in 2005, suddenly and significantly affecting the bank's funding ability for some time. We should note, however, that BMG has been publicly cleared from political charges and has been restoring its reputation in the local institutional investor market. Good risk-management architecture is supported by proprietary technologies, which are primarily designed to monitor the credit risk figures. The bank distinguishes its position by an agile credit-approval process, and it thus benefits from the good loan granularity that characterizes its niche. BMG practices very conservative hedging policies, although expenses are hefty. As for financial transparency, the bank uses Brazilian GAAP, providing a good level of insightful information through its semiannual audited balance sheets. Moreover, much disclosure on a quarterly basis can be found on the regulator's website, those revised by external auditing as well. Financial statements are audited by PricewaterhouseCoopers. As a bank highly dependent on securitization agreements, liquidity management is modest and still shows a limited mix in comparison to other midsized banks. The bank maintains a conservative cash position around R$800million and R$1 billion, to cover 60% to 80% of third-party deposits. Factor 3: Regulatory Environment

Moody's will comment on the Brazilian regulatory environment in a separate report. Factor 4: Operating Environment Trend: Neutral By using the scorecard, we grade the Brazilian operating environment at a D. The D derives from a score of E for economic stability (measured as nominal GDP volatility over the 20-year period) and D for integrity and corruption. (The integrity and corruption index is based on data from the World Bank, which ranks approximately 200 countries worldwide.) The legal system's score of C indicates the average length of time required for the execution of guarantees in Brazil, in the absence of reliable references for mortgage foreclosure. Quantitative Rating Factors (30% weighting) Factor 5: Profitability Trend: Weakening There are important concerns related to future profitability. As a single product bank, earnings recurrence at these levels is subject sustainability of origination volumes going forward. While the payroll related loan is a low-interest rate product, we believe that the product is in phase of maturation and over the next months, growth rates might not high as seen in the first three quarters of 2010 due to the new long-term consumer loans dynamics imposed by the Central Bank in December 2010. Next developments should also be partially related to the reduction in the lengthening in loan duration and loans revolving, which should require a higher origination flow to compensate reduced amounts. The competition with federal banks, Banco do Brasil and Caixa Economica Federal, puts further tension on profitability recurrence, as they intensify their own origination capacity (proprietary or through the new partnerships), dragging down margins and likely reducing appetite for loan assignments. Another concern related to the bank's bottom line results is the reliance on earnings from credit sales; that accounted for roughly 55% of total credit income since 2009. Note that the forthcoming accounting regulation on loan sales (2012) should required BMG to accrue revenues from securitization in line with the maturity of the ceded loans, generating a reduction in profitability ratios by the time the new accounting rules are implemented. However, the new accounting method also improves earnings predictability, in the long run as long as the origination volume remains quite flat. We view management as challenged to define focused and consistent business models with balanced risk-return profiles that are sustainable over time. Profitability score is B+. Factor 6: Liquidity Trend: Neutral BMG leverages its liquidity off its low-risk/high-yield product allowing the bank to support several credit assignment agreements that boost its origination power. Credit sales represented roughly 67% of total funding. Liquidity is the main area of concern in this operation, given BMG's long-term asset profile, the wholesale-nature of its funding structure, as well as the reliance on securitization that has supported past robust origination flow. With the current liquidity crunch, BMG, as have other banks, has been prioritizing cash liquidity over growth. However, a relevant portion of its deposits comes from confidence-sensitive institutional investors, vulnerable to event risk. During the past crisis, BMG was able to manage the deposit run-off with intense credit sales that were intensified following the reduction of reserve requirements, a stimulus measure to alleviate liquidity pressure of medium sized banks. The lowrisk nature of the payroll linked loans, these were considered the most liquidity asset class during the crisis. Foreign funding alternatives represent 8.2% of total funding, including the US$250 million 10-year subordinated note issued in August 2010. On the scorecard, BMG obtained a score of D for liquidity. Factor 7: Capital Adequacy Trend: Weakening Capital has always been a expansion constrain for Banco BMG. The ambitious growth strategy since 2004, as a pioneer in the payroll lending, has exerted a heavy burden on the bank's capital levels. tight capitalization up to March 2008 has been managed through a R$600million capital injection from its shareholder in March that replenished the year-end border-line BIS ratio, raising the ratio to the 16% level in June 2008. In 2009, the total BIS ratio reached lowest levels of 11.7%, enhanced later by a total of US$550 million in two Tier II instruments issued in 2009 and 2010. The strong earnings generation and dividend reinvestments between 2004 and 2007 were important tools for sustaining capital levels, though, going forward, this contribution should be reduced as credit activities and profitability decline. Although regulators were again postponed the new accounting rules on credit sales until the beginning of 2012, the increased capital allocation for longer than 36 months payroll loans might be a significant point of tension to capital adequacy going forward, as the bank defend its competitive market position. Factor 8: Efficiency Trend: Neutral The score of C for efficiency indicates the bank's cost structure, with steady cost-control efforts, despite high costs related to a third-party distribution structure and to being highly pressured by peers as the bank defends its leading position.

During the 2008, BMG has rapidly adjusted its administrative structure to the challenging scenario, scaling back staff and costs to a changed business dynamics and expected lower profitability level for the period. This was also true when the bank saw the growing origination volume since the 2Q09, when they readapted the bank's size. We believe the neutral trend reveals the bank's challenges in the near term but also its proven ability to resize the franchise in face of the scenarios aheadWe note that cost control is key for business sustainability. Factor 9: Asset Quality Trend: Neutral The score for asset quality is C, considering the three-year average result of 8.08% as of 2009, measured by the total credits in arrears over 90 days (overdue installments and principal amounts). When we add the outstanding ceded portfolio to total on-balance sheet portfolio, this ratios reduces to 2.2% in September 2010, in line with the low credit risk embedded in the payroll segment, which represents roughly 90% of the bank's lending operation.

Global Local Currency Deposit Rating (Joint Default Analysis)

Moody's assigns a global local currency deposit rating (GLC) of Ba2 to Banco BMG. This rating supports the bank's Baseline Credit Assessment of Ba2, which is a direct mapping from the BFSR D. In Moody's view, there is no probability of systemic support to BMG in case of stress, given the bank's the very modest footprint in the deposit industry. This rating has been on negative outlook.

Notching Considerations

Ratings for BMG's subordinated obligations should be notched off the fully supported deposit rating of Ba2 because Moody's believes that there is no legal authority mechanism in place for Brazilian bank regulators to impose losses on subordinated creditors out of a liquidation scenario.

National Scale Rating

BMG is rated Aa3.br/BR-1 by Moody's on Brazil's National Scale, on negative outlook. The rating is supported by creditworthy in its niche market and is derived from the bank's global local-currency rating.

Foreign Currency Deposit Rating

Moody's assigns a Ba2 foreign currency deposit rating for Banco BMG, on negative outlook, as it is constrained by the country's foreign currency deposit ceiling for Brazil.

Foreign Currency Debt Rating

Moody's assigns Ba2 foreign currency debt rating to the senior unsecured notes issued by BMG, and a Ba3 to the two subordinated issues of BMG due in 2019 and 2020. Outlook on debt ratings is negative outlook.

ABOUT MOODY'S BANK RATINGS

Bank Financial Strength Rating Moody's Bank Financial Strength Ratings (BFSRs) represent Moody's opinion of a bank's intrinsic safety and soundness and, as such, exclude certain external credit risks and credit support elements that are addressed by Moody's Bank Deposit Ratings. Bank Financial Strength Ratings do not take into account the probability that the bank will receive such external support, nor do they address risks arising from sovereign actions that may interfere with a bank's ability to honor its domestic or foreign currency obligations. Factors considered in the assignment of Bank Financial Strength Ratings include bank-specific elements such as financial fundamentals, franchise value, and business and asset diversification. Although Bank Financial Strength Ratings exclude the external factors specified above, they do take into account other risk factors in the bank's operating environment, including the strength and prospective performance of the economy, as well as the structure and relative fragility of the financial system, and the quality of banking regulation and supervision. Moody's uses the Baseline Credit Assessment (BCA) to map BFSRs onto the 21-point Aaa-C rating scale and like the BFSR, it reflects a bank stand- alone default risk. Each point on the Aaa-C scale represents a specific probability of default and therefore allows Moody's to use the BCA as an input to Moody's Joint Default Analysis (JDA), described below. The baseline credit assessment reflects what the local currency deposit rating of the bank with the given BFSR would be without any assumed external support from a government or third party. Global Local Currency Deposit Rating A deposit rating, as an opinion of relative credit risk, incorporates the Bank Financial Strength Rating as well as Moody's opinion of any external support. Specifically, Moody's Bank Deposit Ratings are opinions of a bank's ability to repay punctually its deposit obligations. As such, Moody's Bank Deposit Ratings are intended to incorporate those aspects of credit risk relevant to the prospective payment performance of rated banks with respect to deposit obligations, and includes: intrinsic financial strength, sovereign transfer risk (in the case of foreign currency deposit ratings), and both implicit and explicit external support elements. Moody's Bank Deposit Ratings do not take into account the benefit of deposit insurance schemes which make payments to depositors, but they do recognize the potential support from schemes that may provide assistance to banks directly. According to Moody's joint default analysis (JDA) methodology, the global local currency deposit rating of a bank is determined by the incorporation of any external elements of support into the bank's Baseline Credit Assessment. In assigning the local currency deposit rating to a bank, the JDA methodology also factors in the rating of the various potential support providers (parent company, cooperative group, regional or national governments), as well as the degree of dependence that may exist between each one of them and the bank. Moody's assessment of the probability of systemic support (by a national government) is derived from the analysis of the capacity of a government and its central bank to provide support on a system-wide basis. The systemic support indicator is determined for a particular country and serves as an input for all bank ratings in that country. The support indicator can be set at, above or, in rare cases, below the government's local currency bond rating for that country. National Scale Rating

National scale ratings are intended primarily for use by domestic investors and are not comparable to Moody's globally applicable ratings; rather they address relative credit risk within a given country. A Aaa rating on Moody's National Scale indicates an issuer or issue with the strongest creditworthiness and the lowest likelihood of credit loss relative to other domestic issuers. National Scale Ratings, therefore, rank domestic issuers relative to each other and not relative to absolute default risks. National ratings isolate systemic risks; they do not address loss expectation associated with systemic events that could affect all issuers, even those that receive the highest ratings on the National Scale. Foreign Currency Deposit Rating Moody's ratings on foreign currency bank obligations derive from the bank's local currency rating for the same class of obligation. The implementation of JDA for banks can lead to a high local currency ratings for certain banks, which could also produce high foreign currency ratings. Nevertheless, it should be noted that foreign currency deposit ratings are in all cases constrained by the country ceiling for foreign currency bank deposits. This may result in the assignment of a different, and typically lower, rating for the foreign currency deposits relative to the bank's rating for local currency obligations. Foreign Currency Debt Rating Foreign currency debt ratings are derived from the bank's local currency debt rating. In a similar way to foreign currency deposit ratings, foreign currency debt obligations may also be constrained by the country ceiling for foreign currency bonds and notes: however, in some cases the ratings on foreign currency debt obligations may be allowed to pierce the foreign currency ceiling. A particular mix of rating factors are taken into consideration in order to assess whether a foreign currency bond rating pierces the country ceiling. They include the issuer's global local currency rating, the foreign currency government bond rating, the country ceiling for bonds and the debt's eligibility to pierce that ceiling. About Moody's Bank Financial Strength Scorecard Moody's bank financial strength model (see scorecard below) is a strategic input in the assessment of the financial strength of a bank, used as a key tool by Moody's analysts to ensure consistency of approach across banks and regions. The model output and the individual scores are discussed in rating committees and may be adjusted up or down to reflect conditions specific to each rated entity.

Rating Factors Banco BMG S.A. A B C D E Total Score D+ D Trend Neutral

Rating Factors [1] Qualitative Factors (70%) Factor: Franchise Value Market Share and Sustainability Geographical Diversification Earnings Stability Earnings Diversification [2] Factor: Risk Positioning Corporate Governance [2]

- Ownership and Organizational Complexity - Key Man Risk - Insider and Related-Party Risks

x x x x E x

x x x

Neutral

Controls and Risk Management

- Risk Management - Controls x

x

x

Financial Reporting Transparency

- Global Comparability - Frequency and Timeliness - Quality of Financial Information x

x

x x

Credit Risk Concentration

- Borrower Concentration - Industry Concentration x

x

x

Liquidity Management Market Risk Appetite Factor: Operating Environment Economic Stability Integrity and Corruption Legal System Financial Factors (30%) Factor: Profitability PPI / Average RWA- Basel II Net Income / Average RWA- Basel II Factor: Liquidity (Mkt funds-Liquid Assets) / Total Assets

x x D x x x C B+

6.04% 1.88%

Neutral

Weakening

D

15.94%

Neutral

Liquidity Management Factor: Capital Adequacy Tier 1 Ratio - Basel II Tangible Common Equity / RWA- Basel II Factor: Efficiency Cost / Income Ratio Factor: Asset Quality Problem Loans / Gross Loans Problem Loans / (Equity + LLR) Lowest Combined Score (9%)

Economic Insolvency Override

x

A

13.65% 13.08%

Weakening

C

57.46%

Neutral Neutral

C

5.96% 13.47%

Aggregate Score Assigned BFSR

D Neutral CD

[1] - Where dashes are shown for a particular factor (or sub-factor), the score is based on non public information [2] - A blank score under Earnings diversification or Corporate Governance indicates the risk is neutral

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This credit rating is an opinion as to the creditworthiness or a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors. It would be dangerous for retail investors to make any investment decision based on this credit rating. If in doubt you should contact your financial or other professional adviser.

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