The ratings on Bayerische Hypo- und Vereinsbank AG (HVB) are based on the bank's franchise among private and corporate customers in its core markets of Germany, Austria, and Central and Eastern Europe, which provides it with a sound and diversified funding base; and its prudent asset liability management. The ratings also reflect Standard&Poor's assessment of the bank's operational and strategic initiatives--including the implications of the planned spin-off of its mortgage banks and concomitant steps--on HVB's business and risk profile to the extent foreseeable from today's perspective. The ratings on HVB's Öffentliche Pfandbriefe primarily reflect the Pfandbriefe collateral, coupled with protections afforded by German insolvency and banking laws. HVB maintains a segregated, revolving pool of high-quality public-sector loans, on
