The ratings on Austria-based HYPO TIROL BANK AG (Hypo Tirol) reflect those on Austria's State of Tyrol (AAA/Stable/--), which wholly owns the bank and has provided it with a deficiency guarantee (Ausfallbürgschaft). Although the meanwhile grandfathered deficiency guarantee is not a timely guarantee, Standard&Poor's believes that, as long as the state remains the majority owner and guarantor for all of the bank's obligations, it has a strong economic incentive to support the bank in a timely fashion as: The deficiency guarantee covers both full payment of principal and interest--including post-insolvency interest; Hypo Tirol plays an ongoing important role in the local economy; and It would not be beneficial to the state to tarnish its own reputation as an
