The ratings on Bayerische Hypo- und Vereinsbank AG (HVB) are based on the bank's franchise among private and corporate customers in its core markets of Germany, Austria, and Central and Eastern Europe (CEE), which provides it with a sound and diversified funding base; and its prudent asset-liability management. The ratings also reflect Standard&Poor's assessment of the bank's operational and strategic initiatives--including the implications of the planned spin-off of its mortgage banks and concomitant steps, such as its plan to place up to 25% of Bank Austria Creditanstalt AG (BA; A-/Negative/A-2) with investors by means of a free-float capital increase--on HVB's business and risk profile to the extent foreseeable from today's perspective. Primary negative rating factors are HVB's weakened
