The ratings on Abbey National PLC (Abbey) continue to be supported by its strong U.K. market position, continuing good group profitability, comparatively favorable efficiency, solid liquidity, and effective distribution networks. Standard&Poor's considers that Abbey's recent credit losses for 2001 and 2002 reflect the realization of expected losses from several years of its wholesale banking activities. The group's overall risk profile is considered conservative, and remains satisfactory. Abbey has also made good progress with its diversification into nontraditional activities, providing protection against tighter margins in traditional markets. Although regulatory capital measures continue to be good, with a group equity Tier 1 ratio of 6.6% at year-end 2001--excluding Tier 1 hybrids--Standard&Poor's considers that the regulatory capital ratios do
