Svenska Handelsbanken Outlook Revised to Stable From Positive; Ratings Affirmed.

Business Editors

LONDON--(BUSINESS WIRE)--Standard & Poor's

Feb. 28, 2000--

S&P Revises Svenska Handelsbanken Outlook to Stable

Following the announcement that Svenska Handelsbanken (Handelsbanken) will buy back 50 million shares for a maximum amount of Swedish krona (SKr) 4 billion (US$ 459 million), Standard & Poor's today affirmed its long-term single-'A'-plus and its short-term 'A-1' counterparty credit ratings on Handelsbanken, and revised the outlook to stable from positive.

At the same time, Standard & Poor's affirmed its long-term single-'A'-plus and short-term 'A-1' counterparty credit ratings on Stadshypotek AB, Handelsbanken's wholly owned subsidiary. The outlook on Stadshypotek is revised to stable from positive.

Handelsbanken is the largest banking group in Sweden and in the Nordic region. Other ratings on Handelsbanken and its subsidiaries were also affirmed (see list below).

The revised outlook reflects the bank's willingness to lower group capitalization to achieve among other things its return on equity goals, as well as a change in the bank's view on the use of capital. The continued rebuilding of capital has been an important factor in Handelsbanken's rating, and a shift in the bank's use of capital is perceived as a constraining factor for the ratings. In the past, the bank has stated a regulatory Tier 1 capital ratio of about 7% as a long-term goal. With the share buy back, and the fact that its low-risk profile is well accounted for in risk-weighted assets, a Tier 1 ratio -- expected by Standard & Poor's of about 6.3% following the completion of the share buy back -- is too weak to defend the positive outlook.

The ratings on Handelsbanken reflect the bank's leading market position in Sweden and in the Nordic region, sustained robust earnings capacity, continued low cost base, and high asset quality. Handelsbanken has total assets of SKr922.8 billion at Dec. 31, 1999. It is a universal bank, offering a wide range of traditional banking and mortgage products and services, with a growing emphasis on asset management and life insurance and savings products -- which are distributed by an extensive domestic branch network. In Sweden, the bank enjoys a market share of about 30% of lending to households, companies, and others, and of about 18% of deposits from households. The bank is characterized by its robust earnings capacity. Preprovision earnings reached SKr8.4 billion at the end of 1999, up 9% year-on-year. The cost-to-income ratio was 51%. Thanks to the benign economic environment, good credit policies and procedures, and experienced credit management, asset quality is high. The bank reported net credit write-backs in 1999.

OUTLOOK: STABLE

The outlook reflects the expectation that key ratings factors will be sustained, Standard & Poor's said.--CreditWire

RATINGS AFFIRMED; OUTLOOK REVISED TO STABLE
                                Ratings
                            To              From
Svenska Handelsbanken
 Counterparty credit rating
                       A+/Stable/A-1   A+/Positive/A-1
Stadshypotek AB
 Counterparty credit rating
                       A+/Stable/A-1   A+/Positive/A-1

RATINGS AFFIRMED
                                Ratings
Svenska Handelsbanken
 Senior unsecured rating              A+
 Subordinated debt rating             A
 Junior Subordinated debt rating      A-
 Short-term debt rating               A-1

Stadshypotek AB
 Senior unsecured rating              A+
 Commercial paper rating              A-1
 Short-term debt rating               A-1

Svenska Handelsbanken Inc.
 Commercial paper rating/a            A-1


/a   Guaranteed by Svenska Handelsbanken

Credit Profile See list above.