Fitch Assigns Ratings To Turkey's Anadolubank.

Business Editors

NEW YORK--(BUSINESS WIRE)--June 24, 2003

Fitch Ratings, the international rating agency, has assigned ratings to Anadolubank A.S. as follows: Long-term foreign and local currency ratings of 'B-' (B minus), Short-term foreign and local currency of 'B', Individual of 'D', Support of '4T' and a National rating of 'BBB(tur)'. A Negative Outlook is in place for the Long-term ratings in line with the sovereign rating.

Anadolubank's license was purchased from the government's Privatization Administration in 1997 by Habas Group. Habas, the core company of the Group is the country's dominant producer of industrial and medical gases and a large exporter of long steel (rated 'B-' (B minus) Long-term foreign currency/'B+' L-tm local currency and 'A+(tur)' National). Anadolubank mainly focuses on corporate banking, providing short-term loans to medium and large sized companies that have large external trade business. The total number of branches reached 49 in 2002, including three branches purchased from Savings Deposits Insurance Fund (SDIF) and branches cover 85% of GNP. The management plans a maximum of 60 branches by the end of 2006 in order to cover a larger population and increased economic activity.

Fitch notes that while Anadolubank's profitability improved in 2002 - due to improved adjusted net interest income and an increase in non-interest income despite narrowed margins - it was still mediocre, and followed a net loss in 2001. On the other hand, the quality of its loan book remained better than those of its peers and the sector average. NPLs equated to 2.87% of loans at end-2002 (2001: 5.22%) and reserve coverage increased to only 73% from a low 51%. Government securities were reduced during the year but still equated to 49% of assets at end-2002 (2001: 51%), a percentage Fitch considers to be high given Turkey's low sovereign rating. The bank's liquid assets, excluding the trading securities portfolio, decreased to 18% of assets at end-2002 and covered only 22% of customer deposits (2001: 32%), reflecting a deteriorating liquidity that is somewhat mitigated by the resilience of core deposits. Capital was adequate at end-2002 and the bank's regulatory capital adequacy ratio, including market risk, equated to 15.29% (2001:14.80%), with 97% in Tier 1. Total free capital equated to 4.01% of assets at end-2002, better than that of some of its peers.

Anadolubank, being a lower medium sized bank with a relatively small branch network, has limitations in improving its profitability and efficiency because of economies of scale. In the presence of its large government securities portfolio and deteriorated liquidity coupled with structural maturity mismatch, Fitch notes that the effectiveness of newly upgraded risk management systems has yet to be tested. Nevertheless, the quality of the loan book, which has been good, the shareholder support of the strong and committed owners and quality of adequate capital are encouraging factors for the positive prospects of the bank.

Note to Editors: Fitch's Individual and Support 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. A Support rating qualified by the suffix "T" indicates significant existing or potential transfer risk of economic and/or political origin that might prevent support for foreign currency creditors.

Fitch's National ratings provide a relative measure of creditworthiness for rated entities in countries with relatively low international sovereign ratings and where there is demand for such ratings. The best risk within a country is rated 'AAA' and other credits are rated only relative to this risk. National ratings are designed for use mainly by local investors in local markets and are signified by the addition of an identifier for the country concerned, such as 'AAA(tur)' for National ratings in Turkey. Specific letter grades are not therefore internationally comparable.