Banco de Credito Local's Ratings on S&PWatch Pos.

PARIS--(BUSINESS WIRE)--S&P's CreditWire 7/1/98--Standard & Poor's today placed its single-'A'-plus long-term and 'A-1' short-term counterparty ratings of Banco de Credito Local S.A. (BCL) on CreditWatch with positive implications. At the same time, Standard & Poor's affirmed its single-'A'-plus long-term counterparty and senior unsecured and 'A-1' short-term counterparty and commercial paper ratings of Corporacion Bancaria de Espana, S.A. (Argentaria) and related entities. These ratings actions follow the announcement on June 29, 1998 of the acquisition of a 40% stake in BCL by Dexia, the group created by the 1996 alliance between Credit Local de France S.A. (CLF) and Credit Communal de Belgique (CCB), both rated double-'AA'-plus/Negative/'A-1'+ by Standard & Poor's (see separate press release). For the past several years, BCL has enjoyed the best financial risk profile of any member of the Argentaria group, due to the low credit-risk nature of BCL's lending business and its strong operating profitability. The entry of Dexia as a strong and expert minority partner of BCL will create a certain separation and independence of BCL from the rest of the Argentaria group, whose remaining units are in the process of merging. Standard & Poor's believes that BCL will benefit from a partnership with Dexia, the leading provider of funding to local authorities in several European countries. Through the partnership, BCL should be able to sell certain products and services developed by Dexia and could improve its financial flexibility.

Up to now, BCL's credit rating has reflected the increasing integration of the different business units of the Argentaria group. At present, a corporate center in Argentaria manages the treasury, back office, information systems, and strategic planning for all business units within the group. Argentaria also centralizes long-term capital-markets funding for the group, allocating funds to each of its four operating units according to their needs. The process of integration culminated with the March 1998 announcement of the merger of all Argentaria's business units, with the exception of BCL, which will remain legally independent. With total assets of Spanish peseta (Pta) 1.5 trillion (US$10.5 billion at Pta150 to US$1) at Dec. 31, 1997, BCL is the leading provider of funding to local and regional authorities in Spain. Although increasing competition and disintermediation have eroded BCL's dominant position since 1985, the bank still has a strong 25% share of this market. The CreditWatch action will be resolved upon completion of the transaction, which is subject to approval by the respective governing bodies and regulatory authorities, Standard & Poor's said. -- CreditWire. RATINGS PLACED ON -0-

CREDITWATCH WITH POSITIVE IMPLICATIONS
                            TO                 FROM
Banco de Credito Local
Counterparty credit rating  A+/Watch Pos/A-1   A+/Stable/A-1
CD                          A+/A-1/Watch Pos   A+/A-1
RATINGS AFFIRMED
Corporacion Bancaria de Espana
Counterparty credit rating  A+/Stable/A-1
Senior unsecured            A+
Sub debt                    A
CD                          A+/A-1
Pref stk                    BBB+
CP                          A-1

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