Fitch Assigns TBIH Financial Services Group's Debt Issue Expected 'B' Rating.

LONDON -- Fitch Ratings has today assigned TBIH Financial Services Group N.V.'s ("TBIH") senior debt issue an expected Long-term 'B'. This rating is primarily based on the financial strength of the TBIH Financial Services Group N.V. but also benefits from a guarantee provided by TBIF Financial Services B.V. (a subsidiary of TBIH) and a partial guarantee provided by the Dutch development agency Nederlandse Financierings-Maatschappij Voor Ontwikkelingslanden N.V. ("FMO"). At the same time Fitch has assigned TBIH a Long-term rating of 'B-' (B minus) with Stable Outlook.

The final rating of the debt issue is contingent on receipt of documents conforming to information already received and to confirmation of the issue amount.

The ratings reflect TBIH's risks associated with operating in Central and Eastern Europe ("CEE"), private equity ownership that may reduce the group's financial flexibility in a stress scenario, the current small scale of operations and rapid growth. These features are partially balanced by TBIH's good position in many of its chosen markets, some degree of diversification in its operations (across CEE countries and by type of financial services operation) and improving profitability.

In assigning the ratings, Fitch has factored in its expectation for recoveries related to both lending (i.e. financing) and non-lending businesses. In the case of the debt issue, the recovery expected by Fitch is enhanced by the presence of the FMO partial guarantee, which will guarantee up to EUR33 million for noteholders in the event of default. However, as FMO then shares in the recoveries (pari-passu with noteholders), Fitch has also factored in partial dilution to the underlying recoveries expected from operations. The agency considers that FMO, which benefits from explicit support provided by the State of the Netherlands, constitutes exceptionally strong security for the partial guarantee.

Fitch recognises that TBIH has consistently made a profit from its insurance operations since 2000 and from lending operations since these started in 2002. However, the agency notes there is significant start-up risk from the lending operations that are not yet fully seasoned and that the insurance operations are capitalised relatively weakly, in line with market practice for those regions. Fitch believes that the expected rapid growth of operations (especially lending as a result of the debt raised by TBIH) creates elevated risk and the agency expects a relatively high level of change within the group. The ratings also reflect risks associated with operations in CEE, such as lower average credit quality of investments (including government securities), immature markets and a relatively underdeveloped legal and regulatory framework.

TBIH is a joint stock company based in the Netherlands and acts as a holding company for a number of operating units based throughout CEE. The group was set up in 1998 to take advantage of the relatively undeveloped financial services provision in the region. The focus of the group's operations remains on financial services operations in CEE, especially in the retail and small- and medium-sized enterprise (SME) sectors. TBIH currently has operations in non-life and life insurance, pensions and asset management as well as lending. The group had unaudited equity (including minority interests) of EUR110m at 30 June 2005 and unaudited revenues (gross premiums, interest and fees) of EUR148m for the 6 months to 30 June 2005.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.