S&P Assigns A-/A-2 Rtgs to Banco Pinto & Sotto Mayor S.A. Banco Totta & Acores S.A. Otlk to Stbl.

PARIS--(BUSINESS WIRE)--Standard & Poor's CreditWire 7/17/98-- Standard & Poor's today assigned its single-'A'-minus long-term and 'A-2' short-term counterparty ratings to Banco Pinto & Sotto Mayor S.A. (BPSM). The outlook is stable. In a related action, Standard & Poor's affirmed its single-'A'-minus long-term and 'A-2' short-term counterparty ratings of Banco Totta & Acores, S.A. (BTA), and revised the outlook to stable from negative.

The ratings on Banco Pinto & Sotto Mayor (BPSM) reflect its strong position in retail banking in Portugal, wide customer deposit base, and excellent liquidity, as well as the satisfactory financial profile of the Champalimaud group. The Champalimaud group consists of two major retail banks, BPSM and BTA, Credito Predial Portugues (CPP, a leading mortgage lender), Banco Chemical-Portugal (a small investment bank), and Mundial Confianca (an insurance company).

With Portuguese escudo (Esc) 5.3 trillion (US$29.2 billion at Esc183 to US$1) total assets at year-end 1997, BPSM/BTA is the second-largest private-sector banking group in Portugal, slightly behind the Banco Comercial Portugues S.A./Banco Portugues do Atlantico S.A. group. BPSM, together with BTA, is the second-largest deposit taker in Portugal, with a market share of about 20%, and the third-largest bank lender, with a market share of 19%.

In January 1997, a common management team was set for all the Champalimaud group's banking entities. This was a turning point as, up until then, the group had shown little sign of integrating its strategy, unlike its direct competitors. Controlling stakes were increased to 70% of CPP in 1997 and 94% of BTA in 1998. Several rationalization measures have been introduced, and internal criteria and procedures have been unified, mainly in the lending business. The BPSM-BTA group faces the challenge of integrating its two main banks and exploiting its strong market share in Portugal to improve operating profits.

In 1997, through a strict funding policy, development of fee-based businesses, and strict cost control, the BPSM-BTA group stabilized its profitability-quite a feat given the level of competition in the Portuguese market. Capitalization remains mediocre, however. The goodwill resulting from the expensive acquisition of BTA still weighs on BPSM's consolidated financial profile. Moreover, at year-end 1997, Tier 1 equity, although well above the minimum regulatory ratio, included 36% of preference shares, which Standard & Poor's does not view as pure equity. Partially mitigating this concern are the two capital increases that will follow completion of the Public Exchange Offer on BTA's remaining shares. These operations will increase total share capital to Esc166 billion from Esc103 billion at year-end 1997, Standard & Poor's said. -- CreditWire -0-

ISSUER CREDIT RATINGS
NEW RATING
Banco Pinto & Sotto Mayor S.A.
Counterparty credit ratings        A-/Stable/A-2

RATINGS AFFIRMED/OUTLOOK REVISED TO STABLE
                                   TO        FROM
Banco Totta & Acores S.A.
Counterparty credit ratings   A-/Stable/A-2  A-/Negative/A-2

CONTACT: Yves Burger, Paris (33) 1-4420-6691

Angela Cruz, Madrid (34) 91-308-6869

Jesus Martinez, Madrid (34) 91-308-6869

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