S&P Affirms CLF, CCB, and BIL's Ratings; Outlook Neg.

PARIS--(BUSINESS WIRE)--Standard & Poor's CreditWire 7/1/98-- Standard & Poor's today affirmed its double-'A'-plus long-term counterparty and senior unsecured ratings as well as its 'A-1'-plus counterparty and commercial paper short-term ratings of Credit Local de France (CLF) and Credit Communal de Belgique (CCB), which together form the Dexia group. The ratings of their related entities are also affirmed (see list below). At the same time, Standard & Poor's affirmed its double-'A'-minus long-term counterparty and senior unsecured ratings, and its 'A-1'-plus short-term counterparty and commercial paper ratings of Banque Internationale a Luxembourg S.A. (BIL) and those of its related entities (see list below).

The outlook on CLF, CCB, and BIL's long-term ratings is revised to negative from stable, reflecting Dexia's readiness to accept some deterioration in capital ratios from current levels, as three recent acquisitions show, although the group intends to maintain strong capital ratios by international standards.

CLF and CCB have been jointly owned by Dexia France and Dexia Belgium since their 1996 alliance. Dexia, the commercial name of the group, ranks among the 25 largest financial institutions in Europe, with French franc (FFr) 1,221 billion (about US$200 billion) in assets at Dec. 31, 1997. At the same date, group capital stood at FFr39.7 billion (including the fund for general banking risk). Dexia specializes in three business lines: financing of local authorities, commercial banking (including insurance), and asset management and private banking. The group intends to expand its local-authority financing business throughout Europe, its commercial banking activities in Belgium and Luxembourg, and its private banking and asset-management business primarily in Europe and certain Asian countries. In the course of June 1998, Dexia successively announced the: -- Purchase of a bank in France, the Banque Industrielle et Mobiliere Privee (BIMP) which specializes in asset management. BIL will carry this participation, thus developing its asset-management network outside Luxembourg. This purchase represents an investment of FFr720 million. -- Merger of CCB's and SMAP-Caisse Commune de Pensions's life-insurance business in Belgium into a new company. SMAP is the main insurer of Belgian local authorities, with which the CCB group in general has had a close relationship for the past 25 years. The newly created company will be 51% held by CCB and 49% by SMAP. The creation of this company will enable Dexia to strengthen its position in the insurance business in Belgium, notably in life insurance and pension funds. This operation represents an investment of FFr2.6 billion for the Dexia group. -- Acquisition of a 40% stake in Banco de Credito Local (BCL, rated single-'A'-plus/Watch Positive/'A-1', see separate press release issued today), the leading finance provider to local authorities in Spain. At present, BCL is 100% owned by Corporacion Bancaria de Espana, S.A. (Argentaria, rated single-'A'-plus/Stable/'A-1'), the third-largest bank in Spain. Although Dexia already has a presence in Spain through Dexia Banco Local, this acquisition will enable the group to gain a more solid foothold there. The acquisition of 40% of the capital of BCL will cost Dexia FFr2.6 billion. Depending on BCL's performance, Dexia may have to pay up to FF640 million more to Argentaria in the year 2001. Standard & Poor's considers each of these three operations to be coherent with Dexia's strategy. Although, individually, they do not represent an important investment for the Dexia group, taken together these acquisitions are equivalent to about 15% of Dexia's total equity at Dec. 31, 1997. The group's capital ratios will therefore decline. Negative outlook on CLF's long-term rating In the future, Standard & Poor's will focus its analysis on the growth strategy of the Dexia group, and particularly on its external-growth operations. Any significant change in the group's risk profile or sharper deterioration in its capital ratios could have a negative impact on CLF's long-term rating. Negative outlook on CCB's long-term rating In the future, Standard & Poor's will focus its analysis on the growth strategy of the Dexia group, and particularly on its external-growth operations. Any significant change in the group's risk profile or sharper deterioration in its capital ratios could have a negative impact on CCB's long-term rating. Negative outlook on BIL's long-term rating Henceforth, Standard & Poor's will focus on analyzing the impact on BIL's long-term rating of the Dexia group's development, of changes in BIL's standalone situation, and of its ongoing strategic integration within the Dexia group. ---CreditWire. -0-

ISSUER CREDIT RATINGS      TO                    FROM
Credit Local de France (CLF)
Counterparty rating        AA+/Negative/A-1+  AA+/Stable/A-1+
Senior unsecured           AA+
Sub debt                   AA
Commercial paper           A-1+
CLF Finance Company (guaranteed by CLF)
 Senior unsecured debt     AA+
Financement Local et Regional (Floral)
 Senior unsecured debt     AA+
Dexia Municipal Bank PLC (guaranteed by CLF)
 Counterparty rating       AA+/negative/A-1+  AA+/stable/A-1+
Dexia Kommunbank AB (guaranteed by CLF)
 Counterparty rating       AA+/negative/A-1+  AA+/stable/A-1+
Credit Communal de Belgique (CCB)
 Counterparty rating       AA+/negative/A-1+  AA+/Stable/A-1+
 Senior unsecured debt     AA+
 Commercial paper          A-1+
Cregem Finance N.V. (gtd. by Credit Communal)
 Senior unsecured debt     AA+
 Subordinated debt         AA
Cregem North America Inc. (gtd. by Credit Communal)
 Commercial paper          A-1+
Banque Internationale a Luxembourg (BIL):
 Counterparty rating       AA-/negative/A-1+  AA-/stable/A-1+
 Senior debt               AA-
 Subordinated debt         A+
 Junior subordinated debt  A
 Certificate of deposit    A-1+
 Commercial paper          A-1+
BIL North America Inc. (gtd. by BIL)
 Commercial paper          A-1+
Dexia Project & Public Finance International Bank (Dexia international)
Counterparty credit ratingsAA+/Negative/A-1+  AA+/Stable/A-1+

CONTACT: Sylvie Dalmaz, Paris (33) 1-4420-6682

Arnaud De Toytot, Paris (33) 1-4420-6692

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