On June 6, 2005, Standard&Poor's Ratings Services lowered its long-term counterparty credit rating on BHW Bausparkasse AG, Hameln (BHW B), Germany's second-largest private building savings bank (Bausparkasse), to 'A-' from 'A'. At the same time, the short-term counterparty credit rating was cut to 'A-2' from 'A-1'. The outlook is negative. BHW B is the principal subsidiary of BHW Holding AG (not rated), the parent of the BHW group. The downgrade reflects Standard&Poor's expectation that BHW B's underlying earnings--before gains on loan portfolio sales--will continue to weaken in the next two to three years, primarily due to persistently low interest rates. As asset yields decline, BHW B is increasingly challenged to reduce funding costs for its Bauspar
