Low adjusted capitalization, debt at the holding company level, low profitability, structural asset concentrations, and the strong competitive environment in Central America limit the ratings on Banco G&T Continental S.A. Mitigating factors include the bank's strong and improving market position in Guatemala, stock-ownership support, and good, experienced management. Although capitalization remains a ratings weakness, Standard&Poor's Ratings Services expects noticeable improvement. As of September 2007, the bank's adjusted total equity (ATE)-to-assets ratio was 6.9%, which we consider low. This is an improvement, however, from the 5.2% prior to capital injections and the merger with Banco de Exportación S.A. (Banex). The upcoming issuance of preferred shares should drive capitalization (ATE) to about 9.0%. In our opinion, limited capitalization for a
