The ratings on Bayerische Hypo- und Vereinsbank AG (HVB) reflect its franchise among private and corporate customers in its core markets of Germany, Austria, and Central and Eastern Europe, which provides the bank with a sound and diversified funding base and geographical coverage. The ratings also reflect HVB's progress in executing a range of strategic and cost-cutting initiatives and a stronger focus on credit-risk management, which are expected to gradually further improve its profitability levels in a less severe operating environment. However, Standard&Poor's continues to be concerned about the quality of HVB's loan portfolio because large exposures to single names or industries leave the bank vulnerable to concentration risks as these can only be reduced gradually. At the
