Fitch Affirms Uruguay's HSBC Bank -- Uruguay --, FUCAC, & FAE.

BUENOS AIRES, Argentina -- Fitch Ratings affirmed the ratings assigned to several Uruguayan financial entities as follows:

HSBC Bank Uruguay:

-- Long-term foreign currency rating 'B+', Stable Outlook;

-- Support '4';

-- Long-term national rating: 'AA(uy)', Stable Outlook.

Federacion Uruguaya de Cooperativas de Ahorro y Credito FUCAC:

-- Long-term foreign currency rating 'B-', Stable Outlook;

-- Support '5';

-- Long-term national rating 'BB+(uy)', Stable Outlook.

Cooperativa de Ahorro y Credito FAE:

-- Long-term foreign currency rating 'B-', Stable Outlook;

-- Support '5';

-- Long-term National Rating: BB+(uy)', Stable Outlook.

The ratings assigned to HSBC Bank (Uruguay) S.A. (HSBC (Uy)) are based on its good liquidity levels, as well as the strong backing of its parent company, HSBC Holdings, which is assigned a long-term foreign currency rating of 'AA' by Fitch. In addition, the bank's recurring operating losses are also considered.

HSBC(uy) offers personal banking services, as well as commercial banking services to important clients of the HSBC Group. HSBC (Uy) is fully owned by HSBC Latin America Holdings (UK) Limited, which in turn is a subsidiary of HSBC Holdings Plc.

The ratings assigned to FUCAC are based on its small position within the Uruguayan financial system, the difficulties presented by its shrinking balance sheet in the context of an increasingly concentrated system, but also reflect its good liquidity position. The ratings also take into account the challenges posed by restrictions that will be placed on the bank's activities as a result of its recent decision to operate under a limited license to avoid higher nominal capital requirements.

Established in Uruguay in 1972, FUCAC is a financial cooperative that focuses mainly on small and micro-businesses, as well as consumers. In 2002, FUCAC signed a contract with another Uruguayan credit cooperative, COFAC, whereby the latter transferred 70% of its assets and liabilities to COFAC. Recently, in the face of higher nominal capital requirements, FUCAC requested authorization from the Central Bank of Uruguay (BCU) to operate as a financial cooperative with restricted activities.

The ratings assigned to FAE reflect its small position within the Uruguayan financial system and the difficulties presented by its shrinking balance sheet in the context of an increasingly concentrated system and weaknesses in internal controls given the institution's small staff. They also consider its ample liquidity position and its strong capitalization relative to the size and risk of its activities. At the same time, they also consider FAE's recent request to the BCU to withdraw from the financial system due to higher minimum nominal capital requirements that are being implemented. If approved, Fitch expects that the institution's withdrawal from the system will be orderly.

Established as a credit cooperative in Uruguay in 1977, FAE offers loans and retirement products to its members. It has been unsuccessful in expanding its balance sheet, and it remains the smallest credit cooperative in the financial system.