Countrywide Bank Upgraded; Off S&PWatch Pos.

MELBOURNE--(BUSINESS WIRE)--Standard & Poor's CreditWire 9/17/98--Standard & Poor's today upgraded its ratings on Countrywide Banking Corp. Ltd. (Countrywide Bank) and the senior debt issued by its subsidiary funding vehicle, Countrywide Corp. Ltd., to double-'A'-minus/A-1+ from single-'A'/A-1. The ratings are removed from CreditWatch with positive implications, where they were placed on July 29, 1998. The ratings upgrade follows the sale of Countrywide Bank to the Lloyds TSB group, current owners of The National Bank of New Zealand (NBNZ, rated double-'A'-minus/A-1+). The ratings on NBNZ reflect the support of, and integration with, its parent. NBNZ guarantees all Countrywide Bank debt, including subordinated debt. The rating action affects about NZ$3.25 billion of debt in the name of Countrywide Bank and its wholly owned and guaranteed subsidiary, Countrywide Corp. Ltd. The outlook is stable.

Lloyds Bank plc's purchase of Countrywide Bank for NZ$850 million (with a NZ$110 million capital injection), further solidifies its presence in the New Zealand market, with the retail-focused Countrywide Bank providing a sound complementary fit with NBNZ's significant existing corporate, business, and retail book. NBNZ's capacity to successfully integrate the Countrywide operations while minimizing customer run off will be crucial to the success of the acquisition and will be closely monitored by Standard & Poor's.

Although NBNZ stands to benefit from the acquisition by increased critical mass, improved geographic diversity, an increased customer base, and the potential for significant cost savings throughout the merged entity, these factors are offset somewhat by the difficulty of integrating two distinct businesses.

Countrywide primarily operates in the retail market through 68 branches, which is a relatively small branch network by domestic standards. With assets totalling NZ$8.48 billion at February 1998, Countrywide has a market share of about 6.35% of total system assets. Noting its origins as a building society, the bank's core activities traditionally have concentrated on the consumer market and, in particular, the retail mortgage market, where it has a higher market share. With total assets of NZ$19,778 million at Dec. 31, 1997, NBNZ is the fourth-largest registered bank in New Zealand in terms of assets. NBNZ primarily is a retail- and commercial-banking operation, with a market share of about 15.8% of total system assets in New Zealand, down from 16.5% in fiscal 1996.

The combined assets of Countrywide and NBNZ will total about NZ$28.3 billion, making it one of the largest banks in the New Zealand market, Standard & Poor's said.---CreditWire -0-

OUTSTANDING RATINGS RAISED
                                           Rating
                                 To                        From
Countrywide Banking Corp. Ltd.
Counterparty rating
                            AA-/Stable/A-1+          A/Watch Pos/A-1
Certificates of deposit
                            A-1+                  A-1/Watch Pos
Subordinated debt
                            A+                          A-/Watch Pos
Countrywide Corp Ltd.
Commercial paper program
                            A-1+                  A-1/Watch Pos
Senior unsecured debt
                            AA-                   A/Watch Pos