Fitch Places Grupo Cuscatlan's Subsidiaries on Rating Watch Positive.

NEW YORK -- Today, Fitch Ratings has placed the ratings of various Cuscatlan subsidiaries on Rating Watch Positive (RWP), following the announcement that Citigroup will acquire these companies from Panama's Corporacion UBC Internacional (UBCI).

The following ratings of El Salvador's Banco

Banco Cuscatlan de El Salvador (BCES):

--Long-term Issuer Default rating (IDR) 'BB';

--Short-term foreign currency rating 'B';

--Support '5'.

At the same time, the Outlook on the following national-scale ratings of UBCI's subsidiaries in Panama and Honduras was revised to Positive from Stable (local regulations do not consider the use of Rating Watch on National ratings):

Banco Cuscatlan de Panama (BCP):

--National scale long term rating 'A(pan)';

--Local corporate bonds 'A(pan)' and 'A(slv)'.

Banco Cuscatlan de Honduras (BCH):

--National scale long term rating 'A+(hnd)';

--Local corporate bonds 'A+(hnd)'.

After receiving regulatory approvals, Citigroup will acquire most UBCI's subsidiaries, including those mentioned above. Upon conclusion of the transaction, Cuscatlan's subsidiaries will benefit from the strong potential support of the new and highly rated shareholder Citigroup ('AA+' by Fitch). With a successful closing of the proposed transaction, estimated to take place early in 2007, BCES' IDR will likely be upgraded to El Salvador's country ceiling at 'BBB-', while the short term and support ratings would also be increased to 'F2' and '2', respectively. In turn, the national scale ratings of BCP and BCH will likely be upgraded to 'AAA(pan)' and 'AAA(hnd)', respectively.

BCES' Individual rating remains at 'D' due to bank's challenges in terms of capital adequacy, asset quality and profitability. This rating could also benefit over time from the integration into Citigroup, depending on the scope and timeframe of measures implemented to enhance BCES' risk management and its financial profile.

Fitch considers that the acquisition will provide Citigroup with a robust franchise in Central America. Cuscatlan's subsidiaries, mostly focused on commercial and corporate banking, will complement the recently announced acquisition of Grupo Financiero Uno, prominently focused on retail lending, especially through credit cards. Overall prospects continue to be positive for the region.

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.