. On May 22, 2007, Standard&Poor's Ratings Services raised its Banking Industry Country Risk Assessment (BICRA) on Brazil to Group 5 from Group 6. This action reflects the favorable momentum for the monetary and investment environment in Brazil, and an improvement in the banking industry's competitive structure. The operating environment benefits from the sector's improvement in risk management during the past several years, as well as the increased transparency and better governance of state-owned banks, which represent about 40% of total bank assets in Brazil. Banks have remained profitable in a less volatile macroeconomic environment, characterized by lower and less volatile interest rates. The large Brazilian banks have enhanced their operating efficiency (comparable with that of international peers)
