Fitch Upgrades Turkey's Yapi Kredi Bankasi; Affirms Kocbank.

LONDON & ISTANBUL -- Fitch Ratings has today upgraded Yapi ve Kredi Bankasi's ("YKB") Long-term, foreign and local currency ratings and removed them from Rating Watch Positive (RWP). A Stable Outlook is now in place. The Individual rating is also upgraded and maintained on RWP. Its National Long-term and Support ratings are also upgraded while the Short-term ratings are affirmed. The Outlook on National Long-term rating is Stable. The agency has affirmed Kocbank's Long-term, Short-term, Support and Individual ratings. The Outlook on Kocbank's Long-term ratings is Stable. The ratings are as indicated in the list below.

The rating action follows the acquisition on 28 September 2005 of 57.4% of YKB from Cukurova Group and Savings Deposit Insurance Fund by Kocbank, which is 99.8%-owned by Koc Financial Services ("KFS"). KFS is a 50-50 joint venture between Koc Holding and UniCredito Italiano ("UCI", rated Long-term 'AA-' (AA minus)).

YKB's Long-term and Support ratings are upgraded to be in line with those of Kocbank and to reflect the higher potential support YKB can expect to receive in case of need from KFS.

"Cukurova has used the proceeds of the transaction to pay back a substantial portion of the debt, reducing the total amount owed to YKB to USD0.8 billion from USD2.2bn," says Banu Cartmell, Director in Financial Institutions at Fitch. "The high level of Cukurova debt was one of the main drivers of its former Individual 'E' rating." The RWP for YKB's Individual rating also reflects the positive impact from KFS's plans to reduce the non-core assets that impinge on bank's free capital. It is expected that UCI will provide YKB with the same advanced risk management systems that it used after its purchase of 50% of KFS in 2002. However, Fitch will be monitoring any adjustments to be made to YKB's pension fund, non-core assets and fixed assets, as well as its effects on capitalisation at the time of expected merger of YKB and Kocbank.

YKB and Kocbank are the fourth and fifth largest private sector banks in Turkey with 7.35% and 3.40% respective shares in total Turkish unconsolidated banking assets according to Banking Regulatory and Supervisory Agency guidelines at end-H105. YKB is a domestic market leader in retail banking.

YKB:

Long-term foreign currency (LTFC) rating upgraded to 'BB-' (BB minus) from 'B+', Outlook Stable

Long-term local currency (LTLC) rating upgraded to 'BB+' from 'B+', Outlook Stable

STFC and STLC ratings affirmed at 'B'

Individual rating upgraded to 'D/E' from 'E'; On Rating Watch Positive

Support rating upgraded to '3' from '4'

National Long-term rating upgraded to 'AA-(AA minus)(tur)' from 'BBB+(tur)', Outlook Stable.

KOCBANK:

LTFC rating affirmed at 'BB-' (BB minus), Outlook Stable

LTLC rating affirmed at 'BB+', Outlook Stable

Support rating affirmed at '3'

STFC and STLC ratings affirmed at 'B'

Individual rating affirmed at 'D'

National Long-term rating affirmed at 'AA-(AA minus)(tur)'; Outlook Stable.

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.