Fitch Takes Rating Actions on Grupo Banistmo's Subsidiaries on Acquisition by HSBC.

NEW YORK -- Fitch Ratings has upgraded the ratings of Grupo Banistmo's (Banistmo) subsidiaries, following the successful completion of HSBC's tender offer to acquire a majority stake in Banistmo. On November 24, HSBC announced that it acquired 99.98% of Banistmo's outstanding shares. The rating actions are listed below:

Primer Banco del Istmo (PBI):

-- Long-term Issuer Default Rating (IDR) upgraded to 'BBB+' from 'BB+';

-- Short-term rating upgraded to 'F2' from 'B';

-- Support rating upgraded to '2' from '5';

-- Individual rating affirmed at 'C/D';

-- Local corporate bonds affirmed at 'AAA(pan)' and 'AAA(slv)'.

Banco Salvadoreno (Salvadoreno)

-- Long-term IDR upgraded to 'BBB-' from 'BB';

-- Short-term rating upgraded to 'F2' from 'B';

-- Support rating upgraded to '2' from '3';

-- Individual rating upgraded to 'C/D' from 'D';

-- National-scale long-term rating upgraded to 'AAA(slv)' from 'AA-(slv)';

-- Outstanding unsecured and secured local bonds upgraded to 'AAA(slv)' from 'AA-(slv)' and 'AA(slv)', respectively;

-- National-scale short-term rating affirmed at 'F1+(slv)'.

Inversiones Financieras Bancosal

-- National-scale long-term rating upgraded to 'AAA(slv)' from 'AA-(slv)';

-- National-scale short-term rating affirmed at 'F1+(slv)'.

Banco Banex

-- National-scale long-term rating upgraded to 'AAA(cri)' from 'AA-(cri)';

-- National-scale short-term rating affirmed at 'F1+(cri)'.

Banco Grupo el Ahorro Hondureno (BGA)

-- National-scale long-term rating upgraded to 'AAA(hnd)' from 'AA-(hnd)';

-- National-scale short-term rating upgraded to 'F1+(hnd)' from 'F1(hnd)'.

The rating outlook for all long term ratings is Stable. The upgrade in PBI's and Salvadoreno's support and IDRs to the country ceilings in Panama and El Salvador, respectively, reflect our belief that support from HSBC (rated 'AA' by Fitch) would be forthcoming, if required. In turn, the upgrade in Salvadoreno's individual rating was driven by sustained improvements in capital adequacy, asset quality and profitability. We expect that the integration of Salvadoreno into HSBC will likely continue to benefit its overall financial profile and risk management.

Salvadoreno's individual rating is now equal to PBI's, which was affirmed given that its financial condition and cross-border exposure remain consistent with the 'C/D' Individual rating. Over time, the individual ratings of both banks could benefit from improvements driven by their integration into HSBC. PBI's and Salvadoreno's IDRs are constrained and further upgrades will follow changes in Panama's and El Salvador's country ceilings, respectively.

The acquisition of Central America's largest financial group provides HSBC with a unique and leading position in a region with adequate overall prospects and increasing economic integration. Banistmo operates as a universal bank in Panama and its main foreign markets. In addition to PBI, Banistmo's banking regional franchise includes Corporacion Banex (Costa Rica), Banco Grupo el Ahorro Hondureno or BGA (Honduras), Banistmo Colombia (Colombia), Banistmo Nicaragua (Nicaragua) and Inversiones Financieras Bancosal (El Salvador), Salvadoreno's parent company, where Banistmo holds a 56% stake. In turn, Banistmo's insurance operations include Compania Nacional de Seguros or CONASE (Panama), Compania de Seguros El Ahorro Hondureno or SEAHSA (Honduras) and Internacional de Seguros (El Salvador). At end-September 2006, Banistmo reported consolidated assets and equity of USD9.5 billion and USD837 million, respectively, and was the largest financial conglomerate in Central America in terms of assets.

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.