Fitch Upgrades Providian on Acquisition by Washington Mutual

Business Wire,  Oct 3, 2005  

Tags: acquisition, Providian Financial Corp., Washington Mutual Inc.

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NEW YORK -- Washington Mutual, Inc. ('A/F1'; Stable Outlook) has completed the acquisition of Providian Financial Corp. As a result, Fitch Ratings has upgraded Providian Financial Corp. (PVN) to align its ratings with those of Washington Mutual (WM). Simultaneously, Fitch has withdrawn certain Providian ratings, as those entities are no longer expected to issue new debt securities.

As indicated in Fitch's press release on June 6, 2005, this transaction is the realization of WM's longstanding plans to enter the credit card business, and thus fits nicely into its stated retail strategy. While PVN has had significant business challenges in the past few years, the company's situation has improved considerably under the current management team. One of the last remaining hurdles in PVN's turnaround, i.e. access to more attractively priced and diversified funding, is addressed through this transaction. A significant portion of the current PVN management team has been retained to run this business as a fourth business unit within WM, which Fitch views positively.

Structurally, Providian National Bank has been merged into Washington Mutual Bank, while Providian Financial Corp. has been merged into New American Capital, Inc., a subsidiary of Washington Mutual, Inc. Fitch will maintain ratings on existing Providian debt and deposits that remain, as is our policy. However, all issuer level ratings for these two entities have been withdrawn.

The following ratings have been upgraded and removed from Rating Watch Positive by Fitch:

Providian Financial Corp.

-- Senior debt to 'A' from 'B+';

-- Stable outlook.

Providian National Bank

-- Long-term deposits to 'A+' from 'BB';

-- Senior debt to 'A' from 'BB-';

-- Subordinated debt to 'A-' from 'B+';

-- Short-term deposits to 'F1' from 'B';

-- Stable Outlook.

Providian Capital I

-- Trust preferred to 'A-' from 'B-';

-- Stable Outlook.

The following ratings have been upgraded or affirmed, and simultaneously withdrawn by Fitch:

Providian Financial Corp

-- Short-term debt upgraded to 'F1' from 'B' and withdrawn;

-- Individual upgraded to 'B' from 'D' and withdrawn;

-- Support affirmed at '5' and withdrawn.

Providian National Bank

-- Short-term debt upgraded to 'F1' from 'B' and withdrawn;

-- Individual upgraded to 'B' from 'C/D' and withdrawn;

-- Support affirmed at '5' and withdrawn.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.

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