Deficiency guarantee by the State of Vorarlberg until April 1, 2007; Implicit ownership support after April 1, 2007; Low exposure to interest rate market risk; and Satisfactory capitalization. State guarantee will be phased out by April 1, 2007; Limited potential of home market; and Modest risk-adjusted profitability due to high provisioning costs in relation to revenues. The ratings on Austria-based Vorarlberger Landes-und Hypothekenbank AG (Hypo Vorarlberg) are based on the deficiency guarantee (Ausfallsbürgschaft) of the bank's majority owner, the State of Vorarlberg (Vorarlberg; AAA/Stable/A-1+). Hypo Vorarlberg is a small regional bank in Austria, with a main focus on mortgage and midsize corporate lending. On April 2, 2003, the European Commission (EC) agreed with the Austrian government to phase out state
