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Fitch Rates Dynamic $2.0 Billion Series B Asset-Backed Commercial Paper Program 'F-1' -- Fitch Financial Wire --

NEW YORK, Nov. 25 /PRNewswire/ -- Dynamic Funding Corp.'s $2.0 billion series B asset-backed commercial paper program is rated 'F-1' by Fitch Investors Service.

The rating is based on the Liquidity and Security Agreement, which fully supports the program. The agreement is provided by The Fuji Bank Ltd., Los Angeles Agency.

The Fuji Bank, Ltd.'s short-term obligations are rated 'F-1'. The rating outlook is positive. The rating reflects a number of important factors, including the bank's improving asset quality, a revamped risk profile covering credit, market and operational risk and an enhanced capital position via an anticipated Y 210 billion (US$1.85 billion) issue of new preferred stock. A continuing focused program of cost reduction is expected to enhance the bank's operating profile. Additionally, a restructured risk and pricing matrix is expected to benefit the bank's return on assets and equity, while a solid core deposit base within Japan provides substantial liquidity. Important geographical diversification of earnings includes its U.S. based finance company, Heller International Corp.

The bank's principal objectives include positioning itself as a recognized integrated financial services group meeting global standards and the establishment of a culture of cost competitiveness, which will be required to operate effectively in an environment of increasing liberalization and deregulation. The bank has initiated a restructuring effort, including a 10% reduction in full time personnel during the 1996-98 period, primarily through attrition and a rationalization of the branch structure. For the near-term, expenses are being contained by a policy of no increases in base compensation in FY 1996 and a payroll cut for senior managers, as well as a freeze on general and administrative expenses at the FY 1995 level (excluding the mandated increase in deposit insurance premiums and investment for a new computer processing unit).

Fuji's net income of Y 57.2 billion for the first half of FY 1996, ended Sept. 30, reflects a sharp reduction in credit costs from improved asset quality measurements. Credit costs of Y 80.7 billion were down 64% from last year's first half. The bank's net business profit (gyomu jun-eki) was below first half FY 1995, as market-related activities (realized gains on bond sales) were reduced from the extraordinarily high levels of the earlier period. When comparing the two first half periods, operating expenses were essentially flat. Fitch expects the remaining major asset quality problem will be covered by provisions during the second half of FY 1996, ending March 31, 1997. Reserve coverage of expected nonperforming loans plus restructured loans is projected to be about 75% on a fully taxed basis -- one of the higher levels among major Japanese banks.

SOURCE Fitch Investors Service
 -0- 11/25/96


/CONTACT: Kenneth J. Rosenberg, Esq., 212-908-0609, Fred W. DeBussey, 212-908-0521, or Peter G. Jordan, 212-908-0566, all of Fitch/

CO: Dynamic Funding Corp. ST: IN: FIN SU: RTG

MP -- NYM122 -- 3817 11/25/96 13:58 EST http://www.prnewswire.com
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Date:Nov 25, 1996
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