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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 Noun 1. Swedish krona - the basic unit of money in Sweden

Swedish monetary unit - monetary unit in Sweden

ore - a monetary subunit in Denmark and Norway and Sweden; 100 ore equal 1 krona
 (SKr) 4 billion (US$ 459 million), Standard & Poor's today affirmed af·firm  
v. af·firmed, af·firm·ing, af·firms
1. To declare positively or firmly; maintain to be true.

2. To support or uphold the validity of; confirm.

 its long-term single-'A'-plus and its short-term 'A-1' counterparty Counterparty

The other participant, including intermediaries, in a swap or contract.
 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 Wholly Owned Subsidiary

A subsidiary whose parent company owns 100% of its common stock.

In other words, the parent company owns the company outright and there are no minority owners.
. 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 capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets.  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 con·strain  
tr.v. con·strained, con·strain·ing, con·strains
1. To compel by physical, moral, or circumstantial force; oblige: felt constrained to object. See Synonyms at force.

 factor for the ratings. In the past, the bank has stated a regulatory Tier 1 capital Tier 1 Capital

A term used to describe the capital adequacy of a bank. Tier I capital is core capital, this includes equity capital and disclosed reserves.

Equity capital includes instruments that can't be redeemed at the option of the holder.
 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 Risk-Weighted Assets

In terms of the minimum amount of capital that is required within banks and other institutions, based on a percentage of the assets, weighted by risk.

The idea of risk-weighted assets is a move away from having a static requirement for capital.
, 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 char·ac·ter·ize  
tr.v. character·ized, character·iz·ing, character·iz·es
1. To describe the qualities or peculiarities of: characterized the warden as ruthless.

 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 Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental , and experienced credit management, asset quality is high. The bank reported net credit write-backs in 1999.


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

                            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

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.
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Date:Feb 28, 2000
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