Business Services Industry

S&P Cuts Banca del Gottardo Rtgs to 'BBB+'; Outlk Dev

Business Wire, July 26, 2002

Business Editors

LONDON--(BUSINESS WIRE)--Standard & Poor's

July 26, 2002-- Standard & Poor's Ratings Services said today it lowered its long-term counterparty credit and certificate of deposit ratings on Switzerland-based Banca del Gottardo (Gottardo) to triple-'B'-plus from single-'A'-minus.

At the same time, Standard & Poor's revised its outlook on Gottardo to developing from negative. In addition, the bank's 'A-2' short-term counterparty credit and certificate of deposit ratings were affirmed.

Gottardo is a wholly owned subsidiary of Swiss Life/Schweizerische Lebensversicherungs- und Rentenanstalt AG (A/Negative/--).

"The rating actions reflect the likely tightening of Swiss Life's strategic focus as the group's top priority is to concentrate on improving the profitability of its core life insurance business. As a result, continued financial support for Gottardo might no longer be implied," said Peter Dutton, a director at Standard & Poor's Financial Services Group in London. The ownership by Swiss Life, which acquired Gottardo in 1999, has been a positive rating factor.

On a stand-alone basis, Gottardo has been adversely affected by the deterioration in global equity markets, its net income falling 77% in 2001, largely as a result of investment losses and an increase in depreciations and provisions. Despite a tightening in corporate structure and risk management, as well as the introduction of cost-cutting programs, earnings recovery--this year and next--remains vulnerable to external factors. The first half results for 2002 represent a marked improvement on the second half of last year, however.

There is mounting speculation that Gottardo could be sold. Swiss Life has not publicly commented on these rumors, however. If the bank were sold, its ratings could be dependent on those on the acquiring group and its prospective strategic importance to that group.

"The ratings on Gottardo could be raised on evidence of stronger parental support," said Mr. Dutton.

"In the absence of a significant recovery in the bank's retained earnings, however, the ratings could be lowered," he added.

A complete list of rating actions is available to subscribers of RatingsDirect, Standard & Poor's Web-based credit analysis system, at www.ratingsdirect.com. They are also available on Standard & Poor's public Web site at www.standardandpoors.com; under Rating Actions, select Newly Released Ratings Listings. Alternatively, call the Standard & Poor's Ratings Desk in London at (44) 20-7847-7400.

ANALYTICAL E-MAIL ADDRESSES

peter_dutton@standardandpoors.com

paul_waterhouse@standardandpoors.com

FIG_Europe@standardandpoors.com