Fitch Affirms Ratings of Banco Nacional de Mexico

Business Wire, Dec 2, 2002

Business Editors

NEW YORK--(BUSINESS WIRE)--Dec. 2, 2002

Fitch Ratings has affirmed the 'BBB-' long-term foreign currency (Outlook Stable), 'F3' short-term foreign currency, 'BBB' long-term local currency, 'F2' short-term local currency, 'C' individual and '3' support ratings for Banco Nacional de Mexico (Banamex). Banamex's ratings are based on its predominant position within the country's financial system, its significant deposit market share and the potential support it would receive from Citigroup, should it be required. Its ratings also reflect its sound capital base and historically strong profitability, which has been hampered recently by high loan loss provisioning deriving from stricter provisioning guidelines issued by the financial authorities and deteriorating asset quality as well as one-off restructuring costs derived from the merger. The bank's foreign currency ratings are constrained by the sovereign ceiling.

Banamex was Mexico's second largest commercial bank ranked by total assets at end-June 2002 with a market share by total assets of over 21%. It offers a wide range of commercial, retail and investment banking services through its extensive national network of 1,427 branches. Whilst Banamex was 100%-owned by Grupo Financiero Banamex-Accival (Banacci), a leading Mexican financial group, in August 2001 this was acquired by Citigroup of the US, which now holds a 99.9% stake. Citigroup's former operations in Mexico, Grupo Financiero Citibank (financial group), Citibank Mexico (commercial bank) and Garante (pension fund management) were merged into Banacci and Banamex, respectively, in October 2001. Although the name of the bank remained unchanged, the financial group was renamed Grupo Financiero Banamex. The management of the new institution was largely drawn from Banamex. While Banamex had significant investments in Banco Bansud of Argentina (60%) and California Commerce Bank of the US (100%), the former was spun-off to Citigroup and the latter was sold to fit Citigroup's global strategy.