FINANCIAL INSTITUTIONS RESEARCH

S&P Expects That The ECB's Review Of Eurozone Banks Will Have A Limited Impact On Ratings
Primary Credit Analyst: Osman Sattar, London (44) 20-7176-7198; osman.sattar@standardandpoors.com Secondary Contacts: Angela Cruz, Madrid (34) 91-389-6945; angela.cruz@standardandpoors.com Markus W Schmaus, Frankfurt (49) 69-33-999-155; markus.schmaus@standardandpoors.com Stefan Best, Frankfurt (49) 69-33-999-154; stefan.best@standardandpoors.com Research Contributor: Joseph Godsmark, London; joseph.godsmark@standardandpoors.com

Table Of Contents
Overview Our Ratings Already Factor In Weaknesses In Capital Strength And Asset Quality This Assessment Is Likely To Be Considered More Credible Asset Quality Review Failures May Face Immediate Remediation, Unlike Stress Test Failures Credible Backstops Are Key To Supporting Confidence In Banks That May Fail The Assessment Some Surprises Might Be In Store About Asset Quality Appendix Related Research

WWW.STANDARDANDPOORS.COM/RATINGSDIRECT

DECEMBER 9, 2013 1
1225475 | 300051529

Table Of Contents (cont.)

Related Criteria

WWW.STANDARDANDPOORS.COM/RATINGSDIRECT

DECEMBER 9, 2013 2
1225475 | 300051529

S&P Expects That The ECB's Review Of Eurozone Banks Will Have A Limited Impact On Ratings
In an historic shift in how eurozone banks are supervised, the European Central Bank (ECB) is preparing to assume direct regulatory responsibility in November 2014 for banks representing about 85% of banking assets in the region. To start with a clean slate, the ECB is conducting a three-part "comprehensive assessment" of eurozone banks: a review of key risks including liquidity, leverage, and funding; an asset quality review (AQR); and a stress test. In carrying out these assessments, the ECB is aiming to achieve transparency (by enhancing the quality of banks' public financial information); balance sheet repair (by identifying and implementing appropriate corrective actions); and confidence building (by providing assurance to stakeholders that banks are "fundamentally sound and trustworthy").

Overview
For the banks that we rate, we do not expect a material ratings impact from the European Central Bank's assessment because we already recognize weaknesses in capital and asset quality in current ratings, and because we would expect some banks to adjust regulatory capital positions before the October 2014 announcement of results. We expect the ECB's assessment in 2014 to be more rigorous than the European Banking Authority's stress test in 2011 because of the ECB's greater independence and its new mandate as the single supervisory body for about banks representing about 85% of banking assets in the eurozone. The timing for corrective actions is different for the asset quality review than for the stress test. The AQR is more immediate and will require immediate action. Any shortfall identified by the stress test can be met over a longer period of time. Credible backstops and plans for corrective actions are critical for supporting confidence in the eurozone. Senior creditors of banks that fail the ECB's AQR or stress test would unlikely face losses, in our view, but shareholders and some subordinated creditors could.

Our Ratings Already Factor In Weaknesses In Capital Strength And Asset Quality
We do not anticipate changing ratings if the AQR and stress test reveal capital shortfalls for banks where we already assess capital and asset quality as a negative rating factor. Between now and October 2014, banks have time to continue improving their regulatory capital positions to be able to mitigate any vulnerabilities. Of course the ECB's assessment may reveal additional fragilities in rated banks that we have so far not identified. This may include previously unidentified weaknesses in some banks' loss recognition, provisioning, and collateral valuations where significant, which could lead to a ratings review. The ECB has listed 124 banks that are likely to be subject to its assessment. We rate 79 of these banks (see table 1) and our ratings currently consider that more than half of them have a rating weakness in our assessment of their capital strength or asset quality. This relative ratings weakness, in our view, is more bank-specific than country-specific; there are banks of varying

WWW.STANDARDANDPOORS.COM/RATINGSDIRECT

DECEMBER 9, 2013 3
1225475 | 300051529

S&P Expects That The ECB's Review Of Eurozone Banks Will Have A Limited Impact On Ratings

strength in each country (see chart 1). In this chart, we group rated banks subject to the assessment (the same as in table 1) by country and our view of the combined impact of capital and earnings and risk position as follows: Neutral or positive for the rating, A slight negative for the rating (one rating notch) and A material negative for the rating (two or more notches). Table 1 provides more detail about these banks and column 8 in displays the combined impact for each bank. Our view about relative capital strength and asset quality is derived from our assessments of capital and earnings and risk position, which are key rating factors in our ratings methodology. The capital and earnings assessment measures a bank's ability to absorb losses, and the risk position assessment is a broad measure of a bank's risks including asset quality. The combined impact of these assessments can be a positive, neutral or negative rating factor.
Chart

Banks have already started to act

Through October 2014, we believe many banks will continue to increase their regulatory capital ratios, through reductions in risk-weighted assets (RWAs) as well as increases in capital. For example, we expect banks (including banks that promised to reduce their RWAs in exchange for state aid) will continue to reduce RWAs through further

WWW.STANDARDANDPOORS.COM/RATINGSDIRECT

DECEMBER 9, 2013 4
1225475 | 300051529

S&P Expects That The ECB's Review Of Eurozone Banks Will Have A Limited Impact On Ratings

disposals and run-offs of noncore assets during 2014. Banks may also increase provisions against loans that the AQR is more likely to highlight as problematic. For example, KBC Group N.V. plans to increase provisions against its Irish loan portfolio in response to the EBA's harmonized definitions of "forbearance" and NPLs (nonperforming loans), with a likely charge of 775 million by the end of this year. We believe the Italian government's proposal to increase the tax deductibility of loan loss provisions booked from 2014 onward will likely encourage Italy's banks to increase provisions ahead of the exercises. In Spain, the recent change in the treatment of deferred tax assets will help strengthen banks' regulatory capital. The ECB's supervisory risk assessment will review key risks facing banks including those to liquidity, leverage, and funding. We have seen improvements in funding and liquidity for Europe's largest banks in recent years, but in our view they still have a long way to go to narrow funding gaps. (See "Western Europe's Top 50 Banks Still Have A Long Way To Go To Fill The Funding Void," Oct. 21, 2013). The last column in table 1 shows the combined impact of our funding and liquidity assessments on the banks' stand-alone credit profiles (SACPs).

This Assessment Is Likely To Be Considered More Credible

The ECB will be keen to start its supervisory responsibilities in November 2014 with banks that have the trust of investors and other stakeholders, and are either already well-capitalized or have a clear path toward that end. Well-capitalized banks that are trusted by stakeholders would also be in a much better position to support economic recovery. The ECB's comprehensive assessment is a welcome and necessary step toward achieving these outcomes. In our view, the keys to success are greater transparency about banks' asset quality, and balance sheet repair supported by credible backstops where necessary. While the ECB has set out a detailed process and timeline for its AQR and stress test, the methodology has not yet been disclosed in detail. Accordingly, a full assessment of the effectiveness and rigor of the process would be premature. In October 2013, the ECB outlined the three parts of its comprehensive assessment: A supervisory risk assessment that will review key risks regarding liquidity, leverage, and funding; The AQR, which will examine a broad range of banking assets and consider the adequacy of asset and collateral valuation and related provisions, using consistent data definitions; and The stress test, an examination of the resilience of banks' balance sheets to stress scenarios, carried out by the European Banking Authority (EBA). We believe the comprehensive assessment will likely be seen by market participants as more credible and effective than the previous set of stress tests in the eurozone, which the EBA conducted and that were criticized for being undermined by political influence. We think this is unlikely to reoccur, given the greater statutory independence and authority of the ECB. We do know that the AQR will be based on year-end 2013 data, and that it will use a minimum regulatory capital requirement of 8% common equity Tier 1 (CET1) under the definition that will apply in the EU in 2014. This means that, for example, assets such as goodwill and intangibles will still be included in CET1. These elements will be phased out of the CET1 definition gradually over time. The stress test's definition of capital will be stricter because it will be

WWW.STANDARDANDPOORS.COM/RATINGSDIRECT

DECEMBER 9, 2013 5
1225475 | 300051529

S&P Expects That The ECB's Review Of Eurozone Banks Will Have A Limited Impact On Ratings

the one that will apply at the end of the stress horizon.

Asset Quality Review Failures May Face Immediate Remediation, Unlike Stress Test Failures
In our view, capital shortfalls that come to light as result of the AQR will require immediate corrective actions to build capital up to the required threshold of 8% CET1, because the shortfalls would likely be regarded as current deficiencies in capital. In contrast, a failure in the stress test would likely be regarded as an indication of insufficient capital to absorb the effects of future, theoretical, stressed conditions. Thus a bank that passes the AQR but fails the stress test is more likely to be given a longer timeframe to build up precautionary capital to the required levels, possibly with non-CET1 contingent convertible forms of capital. Depending on the particular circumstances and urgency, corrective actions could include equity or hybrid capital issuance, asset sales, or profit retention.

Credible Backstops Are Key To Supporting Confidence In Banks That May Fail The Assessment
The ECB has stated it is critical that financial "backstops" be in place before it publishes its results, so that customers and investors can be sure that banks required to increase capital can do so within the appropriate timeframe. National governments have committed to provide public backstops where necessary, without yet giving full details. The ECB suggested that mandatory bail-in of nondeferrable subordinated debt would not be appropriate for banks that fail the ECB stress test, because a precautionary bail-in could disrupt the nondeferrable subordinated debt market. Nevertheless, in our view, it is more likely that a bail-in of nondeferrable subordinated creditors would be required before backstops funded with public money are used because of the rules for EU state aid, although exceptions may be made for reasons of financial stability. Should national governments lack sufficient resources, it is possible that the European Stability Mechanism (ESM) would be called upon to provide funding, which would be applied by the relevant national government to support its own banks. However, we understand that direct recapitalizations from the ESM to banks are not on the table, and debate continues on the conditions under which national governments can access the ESM. In our view, senior unsecured creditors are unlikely to be subject to any bail-in, particularly given that the bail-in tool, in the form of the EU Bank Recovery and Resolution Directive (BRRD), is not expected to be in place until 2015 at the earliest.

Some Surprises Might Be In Store About Asset Quality

From the little that is known about the details of the ECB's AQR, there are aspects that may cause surprises. In particular, the review will apply definitions that the EBA has recommended for the assessment of NPLs and forborne loans, presented here in summary form:

WWW.STANDARDANDPOORS.COM/RATINGSDIRECT

DECEMBER 9, 2013 6
1225475 | 300051529

S&P Expects That The ECB's Review Of Eurozone Banks Will Have A Limited Impact On Ratings NPLs: All exposures (loans, advances, debt securities, and off-balance-sheet exposures) overdue by more than 90 days and all other exposures where the borrower is unlikely to repay without full realization of collateral will be classified as nonperforming exposures, with the exposure amount being calculated as the entire amount outstanding, regardless of any collateral that may be held against the loan. Exposures that are classified as held-for-trading (and thus held at fair value on the balance sheet) are excluded. Forborne loans: The harmonized definition of forborne loans encompasses all loans--whether performing or nonperforming--over which concessions have been granted due to the potential or actual difficulties of the borrower making repayments. Further, the transition out of the forborne classification requires a two-year probation period during which the loan has been performing and "more than insignificant repayments" have been made for at least half that time. While the ECB will use these definitions in its assessment and banks will use them in their regulatory reports to the EBA, banks are not required to report them in their public disclosures. In our view, public disclosures using these definitions would go a long way to enhance the comparability and relevance of information that banks provide to investors (see "The Enhanced Disclosure Task Force: S&P Study Finds That Bank Reporting Has Improved But Still Falls Short," June 26, 2013). In this regard, we see it as a positive step that the European Securities and Markets Authority (ESMA), in its November 2013 review of selected banks' accounting practices, recommends that banks use the EBA's definition of NPLs in their public reports. To the extent that the definitions are stricter than those used by individual banks, there may be surprises on the downside.

Appendix
Table 1 lists the 79 banks that we rate out of the 124 that the ECB has listed as likely to be subject to its comprehensive assessment. This includes cases where we rate a primary bank in the group but may not rate the group holding company. The table shows the current issuer credit rating (ICR), the stand-alone credit profile (SACP) on the bank itself, or the main operating bank of the group if the entity listed is a holding company. The table also lists our capital and earnings assessment, risk position assessment, and the combined impact of these on the rating. It also shows our funding and liquidity assessments for the banks, and the combined impact of these on the rating. Table 2 lists the 14 institutions from the ECB list that we do not rate, but where we rate the group or other entities in the group of which the institution is a part.
Table 1

Institutions In The ECB Comprehensive Assessment That We Publicly Rate

Combined impact capital and earnings and risk Impact of position Funding/Liquidity (notches) Funding/Liquidity (notches) Above Average/Adequate Above Average/Adequate N/A 0 0 N/A

Country Austria Austria Belgium

Institution subject to comprehensive assessment (as listed by Notes ECB in October 2013) Erste Group Bank AG Raiffeisen Zentralbank Oesterreich AG AXA Bank Europe S.A.

ICR A A A

Capital and Risk SACP earnings position bbb+ bbb+ N/A

Moderate Adequate -1 Moderate Adequate -1 N/A N/A N/A

WWW.STANDARDANDPOORS.COM/RATINGSDIRECT

DECEMBER 9, 2013 7
1225475 | 300051529

S&P Expects That The ECB's Review Of Eurozone Banks Will Have A Limited Impact On Ratings

Table 1

Institutions In The ECB Comprehensive Assessment That We Publicly Rate (cont.)

Belgium Belgium Belgium Belgium Belgium Germany Germany Germany Germany Germany Germany Germany Germany (4) (1) (2) (3) Belfius Bank SA/NV Dexia Credit Local Argenta Spaarbank N.V. KBC Bank N.V. Bank of New York Mellon Corp.* Commerzbank AG DekaBank Deutsche Girozentrale Deutsche Apotheker- und Aerztebank eG Deutsche Bank AG ABBB bbb b+ Moderate Moderate -2 Moderate Weak Strong -3 Average/Adequate Below Average/Weak Average/Strong Average/Adequate Average/Strong Average/Adequate Average/Adequate Average/Adequate Average/Adequate Average/Adequate Average/Adequate Above Average/Strong Average/Adequate 0 -3 0 0 0 0 0 0 0 1 0 1 0

BBB+ bbb AA+ AA AAA bbb+ a bbbbbb bbb+ bbb+ aabbbbbb a

Moderate 0

Moderate Adequate -1 Moderate Strong Adequate Weak 0 -2

Adequate Moderate -1 Moderate Adequate -1 Adequate Moderate -1 Strong Strong Strong Strong Adequate 1 Weak -1

DZ BANK AG Deutsche AAZentral-Genossenschaftsbank Deutsche Pfandbriefbank AG KfW IPEX-Bank GmbH Landesbank Hessen-Thueringen Girozentrale Landeskreditbank Baden-Wuerttemberg Foerderbank (L-Bank) Landwirtschaftliche Rentenbank Norddeutsche Landesbank Girozentrale NRW.BANK Skandinaviska Enskilda Banken AB* Volkswagen Financial Services AG (5) BBB AA A

Moderate 0 Adequate 1

Germany

AAA

N/A

N/A

N/A

N/A

N/A

N/A

Germany Germany Germany Germany Germany Germany Spain Spain Spain Spain Spain Spain Spain Spain Spain Spain (7) (8) (6)

AAA

N/A

N/A

N/A

N/A -2 N/A

N/A Average/Adequate N/A Average/Adequate Average/Adequate Average/Adequate Above Average/Adequate Average/Moderate Below Average/Moderate Average/Moderate Above Average/Adequate Average/Moderate Average/Adequate Above Average/Adequate Above Average/Adequate Average/Moderate

N/A 0 N/A 0 0 0 0 -1 -1 -1 0 -1 0 0 0 -1

BBB+ bbbAAA+ AN/A abbb bbb+ bbb+ b+ b+ b abbbb bbbbbbb

Adequate Weak N/A N/A

Adequate Adequate 0 Strong Strong Adequate 1 Moderate 0 1

Westenrot Bausparkasse AG ABanco Bilbao Vizcaya Argentaria, S.A. Banco de Sabadell S.A. Bankia S.A. Banco Popular Espanol S.A. Banco Santander S.A. Bankinter S.A. Ibercaja Banco, S.A. CaixaBank S.A. Kutxabank S.A. NCG Banco, S.A. BBBBB BBBBBBB BB BB BBBBBBBB-

Moderate Very strong Weak Weak Weak

Moderate -2 Moderate -2 Weak -3 1 0 -1 0 1 -2

Moderate Very strong Weak Very weak Weak Strong Strong Strong

Moderate Strong Moderate Weak

WWW.STANDARDANDPOORS.COM/RATINGSDIRECT

DECEMBER 9, 2013 8
1225475 | 300051529

S&P Expects That The ECB's Review Of Eurozone Banks Will Have A Limited Impact On Ratings

Table 1

Institutions In The ECB Comprehensive Assessment That We Publicly Rate (cont.)

Finland France France France France France France France France France France Greece Greece Greece Greece Ireland Ireland Ireland Ireland Italy Italy Italy Italy Italy Italy Italy Italy Italy Italy Italy Italy (10) (9) Pohjola Bank PLC Banque PSA Finance BNP Paribas Groupe BPCE Groupe Credit Agricole Groupe Credit Mutuel HSBC Holdings PLC* La Banque Postale RCI Banque Societe de Financement Local Societe Generale Alpha Bank, S.A. Eurobank Ergasias S.A. National Bank of Greece S.A. Piraeus Bank S.A. Allied Irish Banks PLC Permanent TSB PLC Bank of Ireland Ulster Bank Ltd. Banca Carige SpA Banca Popolare dell'Emilia Romagna S.C. Banca Popolare di Milano SCRL Banca Popolare di Vicenza ScpA Banco Popolare Societa Cooperativa SCRL Credito Emiliano SpA Iccrea Holding SpA Intesa Sanpaolo SpA Mediobanca SpA UniCredit SpA Unione di Banche Italiane Scpa Veneto Banca S.C.P.A. AABB+ A+ A A A A+ A BBB AA A CCC CCC CCC CCC BB B+ BB+ a+ bb+ a aaaa+ bbb+ bbbbbacc cc cc cc b+ b bb Strong Strong Adequate 1 Adequate 1 Average/Adequate Below Average/Adequate Average/Adequate Average/Adequate Average/Adequate Average/Adequate Above Average/Adequate Above Average/Strong Below Average/Adequate Average/Adequate Average/Adequate Average/Very Weak Average/Very Weak Average/Very Weak Average/Very Weak Average/Moderate Below Average/Weak Average/Adequate Below Average/Adequate Average/Moderate Average/Adequate Average/Adequate Average/Moderate Average/Moderate Average/Moderate Average/Adequate Average/Adequate Average/Adequate Average/Adequate Average/Adequate Average/Moderate 0 -1 0 0 0 0 0 1 -1 0 0 -5 -5 -5 -5 -1 -2 0 -1 -1 0 0 -1 -1 -1 0 0 0 0 0 -1

Adequate Adequate 0 Adequate Adequate 0 Adequate Adequate 0 Adequate Adequate 0 Adequate Strong 1

Adequate Moderate -1 Strong Strong Adequate 1 Very weak -4

Adequate Adequate 0 Very weak Very weak Very weak Very weak Weak Weak Weak Weak Weak -4 -4 -4 -4

Adequate -1

Moderate Adequate 0 Weak Adequate -1

BBB+ b+ BBBBBBB BB BBBBB+ BBB BBB BBB BBBBB ccc+ b+ b+ bbb bb+ bb bbb bbb bbb bbbb+

Adequate Moderate -1 Weak Weak Weak Weak -5 -4

Moderate Moderate -2 Moderate Moderate -2 Weak Weak -4 0

Moderate Strong Weak

Adequate -2 0 1

Moderate Strong Adequate Strong

Moderate Adequate -1 Moderate Adequate -1 Weak Moderate -3

WWW.STANDARDANDPOORS.COM/RATINGSDIRECT

DECEMBER 9, 2013 9
1225475 | 300051529

S&P Expects That The ECB's Review Of Eurozone Banks Will Have A Limited Impact On Ratings

Table 1

Institutions In The ECB Comprehensive Assessment That We Publicly Rate (cont.)

Luxembourg Luxembourg Luxembourg (11) Netherlands Netherlands Netherlands Banque et Caisse d'Epargne de l'Etat, Luxembourg Clearstream Banking S.A. Banque Internationale Luxembourg ABN AMRO Bank N.V. Bank Nederlandse Gemeenten N.V. Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank Nederland) ING Bank N.V. Nederlandse Waterschapsbank N.V. Royal Bank of Scotland Group PLC (The)* SNS Bank N.V. Banco BPI S.A. Banco Comercial Portugues S.A. Caixa Geral de Depositos S.A. (12) Banco Espirito Santo S.A. Nova Kreditna Banka Maribor d.d. AA+ AA AA AA+ AAa+ N/A bbb bbb+ a+ a+ Very Strong N/A Moderate 1 N/A N/A Above Average/Strong N/A Average/Adequate Average/Adequate Average/Adequate Average/Adequate 1 N/A 0 0 0 0

Moderate Adequate -1 Adequate Adequate 0 Very strong Strong 3 1

Adequate Strong

Netherlands Netherlands Netherlands Netherlands Portugal Portugal Portugal Portugal Slovenia

A AA+

aa+

Adequate Adequate 0 Very strong Strong 3

Average/Adequate Average/Adequate Average/Adequate Below Average/Adequate Average/Adequate Average/Moderate Average/Adequate Average/Moderate Average/Adequate

0 0 0 -1 0 -1 0 -1 0

BBB+ bbb BBB BBB BBBBBpi bbbbbbbbbccc

Adequate Moderate -1 Adequate Weak Weak Very weak Weak -2

Adequate -1 Moderate -3 Adequate -1

Moderate Adequate 0 Very weak Weak -4

ICR--Issuer credit rating. SACP--Stand-alone credit profile. N.A.--Not available. N/A--Not applicable. Data sources: European Central Bank, Standard & Poors, S&P Capital IQ, The Banker.

Footnotes to table 1: *The issuer credit ratings and component scores are based on the operating company of the institution and are as of Dec. 6, 2013. (1) Dexia Credit Local is the closest match to Dexia N.V. listed by ECB. Ratings data displayed are for Dexia Credit Local, which is the main subsidiary of Dexia N.V. (2) Argenta Spaarbank is the closest match to Investar listed by ECB. Ratings data displayed are for Argenta Spaarbank. Investar is the holding company for Argenta Spaarbank N.V. (3) KBC Bank N.V. is the closest match to KBC Group N.V. listed by ECB. Ratings data displayed are for KBC Bank N.V., which is the main subsidiary of KBC Group N.V. (4) Deutsche Pfandbriefbank AG is the closest match to Hypo Real Estate Holding AG listed by ECB. Ratings data displayed are for Deutsche Pfandbriefbank AG. Hypo Real Estate Holding AG is a nonoperating holding company for Deutsche Pfandbriefbank AG. (5) Wstenrot Bausparkasse AG is the closest match to Wstenrot & Wrttembergische AG listed by ECB. Ratings data displayed are for Wstenrot Bausparkasse AG, which is the main subsidiary of Wstenrot & Wrttembergische AG. (6) Bankia S.A. is the closest match to Banco Financiero y de Ahorros S.A. listed by ECB. Ratings data displayed are for Bankia S.A., which is the core operating entity. (7) Ibercaja Banco, S.A. is the closest match to Caja de Ahorros y M.P. de Zaragoza, Aragon, y Rioja listed by ECB.

WWW.STANDARDANDPOORS.COM/RATINGSDIRECT

DECEMBER 9, 2013 10
1225475 | 300051529

S&P Expects That The ECB's Review Of Eurozone Banks Will Have A Limited Impact On Ratings

Ratings data displayed are for Ibercaja Banco, S.A., which is the main subsidiary of Caja de Ahorros y M.P. de Zaragoza, Aragon, y Rioja. (8) CaixaBank S.A. is the closest match to Caja de Ahorros y Pensiones de Barcelona listed by ECB. Ratings data displayed are for CaixaBank S.A., which is the main subsidiary of Caja de Ahorros y Pensiones de Barcelona. (9) Pohjola Bank PLC is the closest match to OP Pohjola Group listed by ECB. Ratings data displayed are for Pohjola Bank PLC, which is the main subsidiary of OP Pohjola Group. (10) Ulster Bank Ltd. is the closest match to Ulster Bank Ireland Ltd. listed by ECB. Ratings data displayed are for Ulster Bank Ltd., which is the consolidated group that includes Ulster Bank Ireland Ltd. (11) Banque Internationale Luxembourg is the closest match to Precision Capital S.A. listed by ECB. Ratings data displayed are for Banque Internationale Luxembourg. Precision Capital S.A. is the holding company of Banque Internationale Luxembourg. (12) Banco Espirito Santo S.A. is the closest match to Espirito Santo Financial Group S.A. listed by ECB. Ratings data displayed are for Banco Espirito Santo S.A., which is the main subsidiary of Espirito Santo Financial Group S.A.

Table 2

Institutions In The Asset Quality Review That Are Not Rated But Where The Wider Group Is Rated
Country Cyprus Estonia Estonia Estonia Finland Finland France Ireland Luxembourg Luxembourg Luxembourg Latvia Latvia Malta Institution Russian Commerical Bank (Cyprus) Ltd AS DNB Bank AS SEB Pank Swedbank AS Danske Bank Oyj Nordea Bank Finland Abp Banque Centrale de Compensation (LCH Clearnet) Merrill Lynch International Bank Limited RBC Investor Services Bank S.A. State Street Bank Luxembourg S.A. UBS (Luxembourg) S.A. AS SEB banka Swedbank HSBC Bank Malta PLC

Related Research
Western Europe's Top 50 Banks Still Have A Long Way To Go To Fill The Funding Void, Oct. 21, 2013 The Top 100 Rated Banks: The Consensus About Capital Is Unraveling, Sept. 30, 2013 The Enhanced Disclosure Task Force: S&P Study Finds That Bank Reporting Has Improved But Still Falls Short, June 26, 2013

Related Criteria
Banks: Rating Methodology And Assumptions, Nov. 9, 2011 Bank Capital Methodology And Assumptions, Dec. 6, 2010

WWW.STANDARDANDPOORS.COM/RATINGSDIRECT

DECEMBER 9, 2013 11
1225475 | 300051529

S&P Expects That The ECB's Review Of Eurozone Banks Will Have A Limited Impact On Ratings

Additional Contact: Financial Institutions Ratings Europe; FIG_Europe@standardandpoors.com

WWW.STANDARDANDPOORS.COM/RATINGSDIRECT

DECEMBER 9, 2013 12
1225475 | 300051529

Copyright 2013 by Standard & Poor's Financial Services LLC. All rights reserved. No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor's Financial Services LLC or its affiliates (collectively, S&P). The Content shall not be used for any unlawful or unauthorized purposes. S&P and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness or availability of the Content. S&P Parties are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for the results obtained from the use of the Content, or for the security or maintenance of any data input by the user. The Content is provided on an "as is" basis. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT'S FUNCTIONING WILL BE UNINTERRUPTED, OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages. Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact. S&P's opinions, analyses, and rating acknowledgment decisions (described below) are not recommendations to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security. S&P assumes no obligation to update the Content following publication in any form or format. The Content should not be relied on and is not a substitute for the skill, judgment and experience of the user, its management, employees, advisors and/or clients when making investment and other business decisions. S&P does not act as a fiduciary or an investment advisor except where registered as such. While S&P has obtained information from sources it believes to be reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives. To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes, S&P reserves the right to assign, withdraw, or suspend such acknowledgement at any time and in its sole discretion. S&P Parties disclaim any duty whatsoever arising out of the assignment, withdrawal, or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof. S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities. As a result, certain business units of S&P may have information that is not available to other S&P business units. S&P has established policies and procedures to maintain the confidentiality of certain nonpublic information received in connection with each analytical process. S&P may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. S&P reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are made available on its Web sites, www.standardandpoors.com (free of charge), and www.ratingsdirect.com and www.globalcreditportal.com (subscription) and www.spcapitaliq.com (subscription) and may be distributed through other means, including via S&P publications and third-party redistributors. Additional information about our ratings fees is available at www.standardandpoors.com/usratingsfees.

WWW.STANDARDANDPOORS.COM/RATINGSDIRECT

DECEMBER 9, 2013 13
1225475 | 300051529