Deficiency guarantee by the State of Tyrol until April 1, 2007; Sustainable regional franchise within Tyrol; and Improving risk management. Deficiency guarantee will be abolished on April 2, 2007; Highly competitive environment in major business areas; Exposure to the cyclical tourism industry as well as strong small and midsize enterprise loan growth; and Comparatively high interest rate risk in the banking book. The ratings on Austria-based HYPO TIROL BANK AG (Hypo Tirol) are based on the deficiency guarantee (Ausfallbürgschaft) of the bank's 100% owner, the State of Tyrol (AAA/Stable/A-1+). On April 2, 2003, the European Commission (EC) agreed with the Austrian government to phase out state guarantees by April 1, 2007, benefiting some Austrian banks, including all rated Landeshypothekenbanks. (For
