Fitch Affirms Banca Serfin's Ratings.

Business Editors

NEW YORK--(BUSINESS WIRE)--Dec. 13, 2002

Fitch Ratings has affirmed Banca Serfin's ratings at Foreign currency long-term 'BBB-' (Outlook Stable), short-term 'F3', Local currency long-term 'BBB', short-term 'F2' and Individual 'C'. In addition, Fitch has revised its support rating to '4' from '3', signifying that it believes support for the bank is likely, but not certain. Banca Serfin's (Serfin) ratings reflect the bank's adequate capital base, sound asset quality and profitability and are enhanced by Spain's Banco Santander Central Hispano's (SAN) operational support and backing. Its foreign currency ratings are constrained by the country's sovereign rating.

The change in Serfin's support rating, which represents the agency's assessment of whether a bank would receive support should it be necessary, reflects the tightening of Fitch's global methodology for assigning support ratings, as communicated by the agency on July 29, 2002. A support rating of '3' is assigned to a bank that has an institutional, majority owner of sufficient reputation and possessing such resources and resolve that, in Fitch's opinion, support would be forthcoming. In order to qualify for a support rating of '3', certain conditions must be met, including written confirmation of the formalization of parental support. While Fitch continues to take SAN's ownership into account and considers that its commitment to Serfin remains strong, the more restrictive conditions for assigning a support rating of '3' have forced the change, not only in Mexico, but in a number of subsidiaries of financial institutions globally.

Serfin was Mexico's fourth largest private sector bank by total assets at end-June 2002 with a market share of 8.2%. It operates through 567 branches. Nationalized in 1982, Serfin was re-privatized in early 1992. Acquired by shareholders of OBSA brokers, it was part of the integrated Grupo Financiero Serfin (GFS) until June 1999 when, due to concerns over the bank's capital adequacy, it was taken over by IPAB. Following a thorough clean-up process by IPAB, GFS was auctioned off in 2000, with SAN, through its Mexican subsidiary, Grupo Financiero Santander Mexicano (GFSM), winning the bid for 100% ownership. The merger between GFSM and GFS in early 2001 resulted in the group being renamed Grupo Financiero Santander Serfin (GFSS). On December 11, 2002, SAN announced it had agreed to sell a 24.9% stake in GFSS to Bank of America (BofA) for USD 1.6 bln; this is still subject to regulatory approval. Under the agreement, BofA will have 2 voting members (currently totaling 12) in GFSS's board and commits to stay as a shareholder in the group for a minimum of three years, time when it will have a put option to sell its stake back to SAN at book value or list on the stock market. This alliance is intended to advance BofA's strategy to better serve the Hispanic market in the US while at the same time open new business opportunities for SAN through its Mexican subsidiary.

While GFSS maintains two separate banking operations (Serfin and SanMex, combined market share of 16%), it announced in September 2002 the commercial integration of both subsidiaries. It is expected that GFSS will restructure both institutions, which may comprise the transfer of activities between them in order to benefit from deferred tax assets and operational synergies. Although both banks will remain as separate legal institutions, they will operate under the same brand name 'Santander Serfin'.