Fitch Upgrades Banco BHD & Republic Bank IDR to 'B'.

NEW YORK -- Fitch has upgraded the foreign currency long-term Issuer Default Rating (IDR) of Banco BHD and Republic Bank (DR) to 'B' from 'B-'. Fitch has also affirmed Banco BHD and Republic Bank (DR)'s other international and national ratings, as stated below. These actions follow Fitch's recently announced upgrade of the Dominican Republic's long-term foreign currency IDR to 'B'.

The upgrade in the sovereign rating reflects the country's comparably low external and public debt burdens, manageable debt service profile, as well as a consolidation of the economic recovery. Nevertheless, in spite of recent improvements, the Dominican Republic's credit profile continues to be constrained by low liquidity, a situation that can be exacerbated by a loss of confidence and ensuing capital flights.

Despite the improved capacity of the sovereign to fulfill its foreign currency obligations, the operating environment still presents significant challenges for banks due to slow loan demand, low interest rates, weak asset quality ratios and tight capitalization ratios, which require special attention from the authorities and individual players. Nevertheless, the rebound in economic activity, the initial actions implemented towards the overhaul of the regulatory environment, and recent capital injections could drive an improvement of the aforementioned system weaknesses.

Banco BHD's ratings reflect its diversified retail deposit base, significant market share, adequate liquidity, competent management and robust shareholder structure. However, the ratings also consider the bank's volatile asset quality and profitability, as well as its thin capital levels within a competitive operating environment. As of December 2005, Banco BHD ranked third out of 12 commercial banks, with a 13% market share by total assets. Grupo BHD, which controls 60% of Centro Financiero BHD, the bank's holding company, is one of the largest economic groups in the Dominican Republic. BHD enjoys close cooperation with Banco Sabadell of Spain and Banco Popular de Puerto Rico (Popular PR), which together control the remaining 40% of Centro Financiero BHD.

Republic Bank (DR)'s IDR ratings reflect, should it be required, the potential support the bank would receive from its parent, Republic Bank Limited (RB). The individual rating also reflects the constraints imposed by weak asset quality, accumulated losses and the volatility of the operating environment. As of December 2005, Republic Bank (DR) ranked sixth out of 12 commercial banks, with a 3% market share by total assets. In September 2003, RB acquired 99.8% of the shares of Republic Bank (DR). RB is a leading bank in Trinidad & Tobago but also has operations in Guyana, Grenada, Barbados, St. Lucia, and the Cayman Islands and offers banking services throughout the Caribbean.

Fitch has upgraded the following:

Banco BHD

-- Long-term foreign currency IDR to 'B' from 'B-'.

Republic Bank (DR)

-- Long-term foreign currency IDR to 'B' from 'B-'.

The Outlook for both Ratings is Stable.

Fitch also affirms the following:

Banco BHD

-- Short-term foreign currency affirmed at 'B';

-- Long-term local currency IDR affirmed at 'B';

-- Short-term local currency affirmed at 'B';

-- Individual affirmed at 'D';

-- Support affirmed at '5';

-- Long-term national rating affirmed at 'A(dom)';

-- Short-term national rating affirmed at 'F1(dom)'.

Republic Bank (DR)

-- Short-term foreign currency affirmed at 'B';

-- Long-term local currency IDR affirmed at 'B';

-- Short-term local currency affirmed at 'B';

-- Individual affirmed at 'E';

-- Support affirmed at '4';

-- Long Term National Rating affirmed at 'A+(dom)';

-- Short Term National Rating affirmed at 'F1(dom)'.

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.