Banca Agricola Mantovana Asgnd A-/A-2 Rtgs by S&P;Otlk Stble.

LONDON--(BUSINESS WIRE)--Standard & Poor's CreditWire 7/17/97-- Standard & Poor's today has assigned its single-'A'-minus long-term and 'A-2' short-term counterparty ratings to Banca Agricola Mantovana SCRL (BAM). The long-term outlook is stable. The ratings reflect the bank's strong position in the province of Mantua in northern Italy, its innovative management, and its sound fundamentals. Though BAM's financial profile has suffered from the wave of acquisitions it has undertaken in the past three years, it remains satisfactory and Standard & Poor's expects its consolidated performance to recover gradually in the coming years.

BAM is a midsize regional cooperative bank in Italy with consolidated total assets of Italian lira (ITL)16.6 trillion (US$10 billion) at year-end 1996. Since 1994, BAM has taken over several local banks in northern and central Italy. Though the province of Mantua still accounted for one-third of BAM group's 260 branches at April 30, 1997, the group is now present in other provinces of Lombardy, in the regions of Emilia-Romagna, and Veneto, as well as in the less wealthy regions of central Italy. While BAM is predominantly a mainstream commercial bank serving individuals and small and midsize businesses, the group can also call upon a particular know-how in asset management and private banking, following the acquisitions of the Florence-based private bank, Banca Steinhauslin, the mutual fund group, SIPAF, and the stockbroker, Intermobiliare Securities.

BAM's dominant position in its home province means it has a stable funding base. Liquidity is even stronger at group level, as the banks acquired in the past three years provide access to areas rich in deposits. The bank's asset quality is adequate, though it does not compare favorably with that of some of the strongest regional banks in Italy. Consolidated ratios are somewhat weaker, due to the situation at Banca Popolare della Marsica, a member of the BAM group based in the Abruzzo region.

Profitability has also suffered from the consolidation of less efficient institutions. While BAM used to have one of the lowest cost-to-income ratios of any Italian bank, the group has lost its comparative advantage in recent years. After depreciation of goodwill and provision for loan losses, the group's net income was modest in 1994-1996. Standard & Poor's expects profitability to improve in coming years, as productivity gains will allow the newly acquired banks to start to contribute positively to consolidated net income.

Traditionally, the bank's capitalization has been strong, thanks to high earnings retention. Though capital ratios have declined sharply since the pace of acquisitions accelerated in 1994, BAM's capitalization remains adequate and is not expected to weaken further in the future.

OUTLOOK: Stable.

The outlook reflects Standard & Poor's expectation that BAM will successfully manage its acquisitions. A more dynamic commercial approach, tight cost control, and a gradual improvement in asset quality should permit the group to increase its overall profitability. While new acquisitions are a possibility, Standard & Poor's does not anticipate any operation that would weaken the group's financial profile, as BAM's management is expected to avoid troubled banks and to refuse any further deterioration of capital ratios. -- CreditWire

CONTACT: Sebastian Cataldo, London (44) 171-826-3589

Arnaud De Toytot, Paris (33) 1-4420-6692