The ratings on Abbey National PLC are supported by its strong U.K. market position, continuing good group profitability, good efficiency, strong liquidity, and effective distribution networks. Core capitalization is under some pressure, however, and competition is more aggressive in key markets. Abbey National is therefore diversifying into nontraditional activities less closely related to the U.K. housing market. Nontraditional diversified activities contributed about 53% of group pretax profit in 2000. These provide some protection against tightening margins in traditional markets. Abbey National's regulatory capital measures continue to compare favorably by domestic and international standards, with a group Tier 1 capital ratio of 8.9% at Dec. 31, 2000 (comprising an adjusted common equity-to-risk assets ratio of 7.5%, which Abbey National calls its
