The ratings on Germany-based 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 (CEE), which provides the bank with a sound and diversified funding base and geographical coverage. It also reflects Standard&Poor's Ratings Services expectation that the strengthening of loan-loss reserves (LLRs) and restructuring measures, which have reduced HVB's capitalization to very low levels, will be largely offset by improved future earnings retention to restore its capital base. Standard&Poor's expects that Bank Austria (BA) will continue its positive earnings trend in 2005, thus remaining a key positive rating factor in Standard&Poor's assessment of the HVB group. Primary
