S&P Asgns Ratings to Banco HSBC Bamerindus of Brazil.

NEW YORK--(BUSINESS WIRE)--S&P's CreditWire 8/19/98--Standard & Poor's today assigned its double-'B'-minus/single-'B' counterparty credit and certificate of deposit ratings to Banco HSBC Bamerindus S.A.(BHSB).

The outlook is stable.

The ratings reflect the strong global banking franchise and financial profile of its ultimate parent, HSBC Holdings PLC (single-'A'-plus/Stable/--) and its HSBC's track record in successful turnarounds and BHSB's excellent asset quality, liquidity, and good capitalization. The ratings also reflect BHSB's current low operating efficiency and profitability derived from acquisition of part of the assets and liabilities of Banco Bamerindus in March 1997 and the bank's subsequent cautious approach to lending. Finally, the ratings take into account the general industry risk in the Brazilian banking sector, which Standard & Poor's views as high within the Latin American countries it follows.

On March 10, 1997, HSBC was authorized to operate in Brazil with the name of Banco HSBC S.A. and on March 26, 1997 it acquired a substantial part of the assets, liabilities, and business of the intervened Banco Bamerindus, with a Reais (R) $l billion (approximately US$960 million) investment. Roughly R$382 million of this capital was used to purchase the business, trade mark, infrastructure, and goodwill of Banco Bamerindus. After that, Banco HSBC S.A. became Banco HSBC Bamerindus. Measured by total assets, with R$13.3 billion as of March 31, 1998, BHSB is the fourth-largest private bank in Brazil and second with respect to the total number of branches.

As of March 31, 1998, gross loans still represented only 16.5% of total assets and only 0.7% of them were nonperforming, with the rest of the balance sheet being mainly comprised of short-term assets and government securities. Under the agreement with the Central Bank of Brazil, during the first year after the acquisition, BHSB was offered the possibility of putting back any loans acquired from the old Banco Bamerindus that were not considered acceptable risks under the HSBC Group's standards. Therefore, the bank mainly focused on assessing the credit quality of the loan portfolio during its first year of existence. As a result of this, BHSB has not grown its loan portfolio substantially, remaining focused on existing loans.

At December 31, 1997, and for the first nine months after the acquisition, BHSB reported a 0.35% return on assets. Profitability measures have been mainly driven by the low level of earning assets and the relatively large operating structure and have been also affected by certain nonrecurring items derived from the agreement between the bank and Central Bank of Brazil. Given the current low levels of lending, capitalization remains more than adequate, with equity representing 8.3% of total assets at the end of the first quarter 1998 and a risk-weighted capitalization of 24.6% as of the end of April, 1998.

HSBC Holdings plc is the U.K.-based holding company for The Hongkong and Shanghai Banking Corp. Ltd., Midland Bank PLC in the U.K., Marine Midland Bank in the U.S., and numerous other banking and financial service companies. The acquisition of Bamerindus business was done in a manner that minimized risk, while significantly strengthening the company's presence in Latin America.

OUTLOOK: STABLE

The outlook reflects BHSB's strong ties to HSBC and the support provided by the HSBC Group's strong capitalization, powerful earnings capacity, and global franchise. Although the strategic issues that BHSB faces are long term, in the short run, BHSB will have to continue working on implementing the HSBC Group's internal controls standards and procedures, bridging cultures and improving operating efficiency. Given the need to continue making the necessary investments in technology, training and personnel, BHSB's operating expenses will remain relatively high in the coming years. Nevertheless, with HSBC's support, the bank should be able to take advantage of the high potential for banking services in Brazil in coming years and become a key player in that market in the future.

Standard & Poor's currently has global counterparty ratings on four Brazilian financial institutions and public information ratings on other five.--CreditWire

OUTSTANDING RATINGS ON BRAZILIAN FINANCIAL INSTITUTIONS
                                                       Rating

Unibanco-Uniao de Bancos Brasileiros, S.A./a            BB-/B
Banco Citibank S.A..                                    BB-
Banco Nacional de Desenvolvimento Economico e Social/a  BB-
Banco do Nordeste do Brasil S.A. (BNB)/a                BB-/B
Banco Bradesco S.A.                                     BBpi
Banco Itau S.A.                                         BBpi
Banco Real S.A.                                         BBpi
Banco Safra S.A.                                        BBpi
Banco Bozano, Simonsen S.A..                            Bpi

/a   Foreign currency rating

CONTACT: Jose R. Tora, 212/208-8222

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