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Rating Action Commentary

ֳ Affirms Fortis Banque Luxembourg at 'AA-'

Thu 14 Dec, 2006 - 6:59 AM ET

ֳ-London/Paris-14 December 2006: ֳ has today affirmed Fortis Banque Luxembourg's ("FBL") ratings at Issuer Default 'AA-' (AA minus), Short-term 'F1+', Individual 'A/B' and Support '1'. The Outlook remains Stable.

The Short-term, Issuer Default and Individual ratings reflect FBL's leading position in the Luxembourg market, satisfactory recurring profits, low risk profile, good liquidity and strong capitalisation. Excluding the bank's intrinsic financial strength, the support it could expect to receive from its parent, Fortis Bank ("FB", rated 'AA-' (AA minus)/'F1+') in case of need would lead to the same Issuer Default and Short-term ratings for FBL.

In 2005, FBL's profitability ratios were satisfactory and compared well with those of its Luxembourg peers. Results reported for H106 indicated continued growth, with operating income up 14.5% and net income (group share) up 26.5%. The bank's loan book has never caused any significant problems and it has a large proportion of low-risk assets, such as well-rated securities. In addition, impaired loans appear adequately covered. Market risk is small and comes only from the bank's structural interest rate positions. FBL has no trading risk. With a Tier 1 ratio of over 10% at end-2005, FBL's capital is strong compared to its low-risk profile.

FBL is one of the largest banks in Luxembourg by total assets. Since 2003 several restructurings have been undertaken that demonstrate the increased integration of FBL with FB, with the latest being the transfer of all FB's leasing activities to a new entity called Fortis Lease Group, 100%-owned by FBL. In addition, in November 2005, the bank was renamed Fortis Banque Luxembourg from Banque Generale de Luxembourg.

A report on this entity will be available shortly on the agency's subscription website, under Financial Institutions/Banks/Full Rating Reports.

Contacts: Alain Branchey, Paris, Tel: + 33 1 44 29 91 41

Media Relations: Francoise Alos, Paris, Tel: +33 1 44 29 91 22; Mayra Cunningham, London, Tel: +44 20 7417 3557.

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