Fitch Affirms Ratings For Spain's Unicaja; Outlook Stable.

Business Editors

LONDON--(BUSINESS WIRE)--Sept. 24, 2003

Fitch Ratings, the international rating agency, has today affirmed the ratings of Montes de Piedad y Caja de Ahorros de Ronda, Cadiz, Almeria, Malaga y Antequera ("Unicaja") at Long-term 'A+', Short-term 'F1', Individual 'A/B' and Support of '3'. The rating Outlook is Stable.

The ratings reflect the bank's strong regional franchise, consistently good profitability, sound asset quality and capital base, and effective management. They also consider its regional concentration and appetite for market risk from equity investments.

Unicaja's sound profitability is supported by a wide net interest margin and good cost control. In 2002 its operating profit was undermined by large write-downs on equity investments and higher loan loss provisions, largely to comply with the statistical loan loss reserve. On the other hand, robust loan growth has supported the rise in its net interest revenue, and this, together with its good record of cost control and growing commission income, have been vital to maintaining its profitability. In the past two years Unicaja has benefited from capital gains on the sale of part of its stake in Vodafone; despite the drop in equity markets, sizeable unrealised capital gains still exist on Unicaja's equity portfolio. The sale of a 50% stake in the group's life insurance company to Aviva will not only produce substantial capital gains for the bank, but should, through its tie-up with Aviva, also generate higher commissions in its life insurance business.

Unicaja's asset quality is excellent, reflected in its impaired to total loans ratio of 0.61% at end-June 2003, and a loan loss cover of 342%. About 57% of the bank's loan portfolio relates to mortgage lending. In seeking alternative revenue sources, Unicaja has built up a significant portfolio of equity investments, resulting in a higher market risk profile and some risk concentration. Its portfolio of private sector fixed-income securities has also increased, mainly to compensate for narrowing margins on its loans. These fixed-income securities are mostly in companies with sound credit ratings, and Unicaja has strict risk-monitoring measures in place to manage its investment portfolio.

Unicaja's large and stable deposit base provides some insurance against the mismatch of short-term deposits funding a predominantly long-term loan book, and also helps liquidity. In addition, the bank has tapped other funding sources, including the issuance of short- and long-term debt in the national and international capital markets. Its capitalisation is good, with a total EU capital/weighted risks ratio of 12.96% at end-June 2003. Its large hidden reserves provide additional comfort.

Unicaja was the parent of Spain's 15th-largest banking group and the eighth-largest savings bank by assets at end-2002. Its activities are centered in the region of Andalusia in southern Spain, where 87% of its 764 branches are located. It is the largest savings bank in the region and the market leader with 15.6% and 10.7% share of the deposit and loan markets, respectively. Its main activities are lending to individuals, mainly residential mortgages, and small- and medium-sized enterprises, funded largely by deposits.

Notes to Editors: Fitch's Support and Individual Ratings for Banks

Fitch's Individual ratings assess how a bank would be viewed if it were entirely independent and could not rely on external support. Its Support ratings deal with the question of whether a bank would receive support from its owners or from the state if it were to get into difficulty. These ratings are not debt ratings but rather, respectively, an assessment of the intrinsic strength of a bank and of any level of outside support that may, or may not, be available to it.