The ratings on Banque Cantonale Vaudoise (BCV) continue to be underpinned by the Canton of Vaud's (A/Stable/--) proven commitment to provide capital support to the bank in time of need. The ratings also reflect the improvement in the bank's overall asset quality following substantial provisioning efforts undertaken in 2001 and 2002. These efforts are expected to reduce the impact of provision charges on bottom-line profitability, thus enhancing net income. However, BCV's operating performance has been comparatively weak, mainly due to the effects of a challenging operating environment on trading and transaction-driven earnings in the past two years. As the bank continues to realign its strategic focus on core businesses, operating performance is expected to improve. Substantial provisioning efforts undertaken at
