Various Rating Actions Taken On French Banks Due To Rising Economic Risks

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1 Due to routine maintenance, there will be no Ratings updates from 8pm Friday, October 26 through 2am Saturday, October 27, EDT. We apologize for the inconvenience and thank you for your patience. Various Rating Actions Taken On French Banks Due To Rising Economic Risks Publication date: 25-Oct :26:16 EST View Analyst Contact Information The economic risks under which French banks operate have increased in our view, leaving them moderately more exposed to the potential of a more protracted recession in the eurozone. We also consider that the economic environment for banking will become more demanding as the French housing market is in the process of correcting a build-up in housing prices, although we expect the impact on banks and the overall economy should be relatively limited. We think industry risks for France's banking sector could rise in the near term as competition in the domestic market could intensify and funding conditions could remain volatile. We are therefore revising our economic risk score for France to '3' from '2'. As we have not changed our assessment of industry risk, which remains '2', we are maintaining our Banking Industry Country Risk Assessment (BICRA) for France in group 2. We are lowering our ratings on BNP Paribas, Cofidis, and Banque Solfea, as we see them as more exposed to this more difficult European environment. We are affirming our ratings but revising the outlooks to negative on Allianz Banque, BPCE, Credit Agricole S.A., Credit Foncier et Communal d'alsace et de Lorraine-Banque, Credit Mutuel, Exane S.A., La Banque Postale, RCI Banque, Societe Generale, and Socram Banque. We are affirming our ratings and outlooks on Banque Accord, Credit Logement, and Credit Foncier de France. Contact Client Services SPCLIENT Call Tree Options Contact Us PARIS (Standard & Poor's) Oct. 25, Standard & Poor's Ratings Services today said it lowered its long- and short-term counterparty credit ratings on Banque Solfea to 'A-/A-2' from 'A/A-1'. We lowered our long- and short-term counterparty credit ratings on BNP Paribas to 'A+/A-1' from 'AA-/A-1+'. We lowered our long-term counterparty credit rating on Cofidis to 'BBB+' from 'A-' and affirmed our 'A-2' short-term rating. The outlook on the ratings on these banks is negative. We also revised the outlook to negative from stable on the following banks: Allianz Banque, BPCE, Credit Agricole S.A., Credit Foncier et Communal d'alsace et de Lorraine-Banque (CFCAL-Banque), Credit Mutuel (rated entity Caisse Centrale du Credit Mutuel), Exane S.A., La Banque Postale, RCI Banque, Societe Generale, and Socram Banque. We affirmed the ratings on these banks. We affirmed the ratings on Banque Accord, Credit Foncier de France (CFF), and Credit Logement. The outlook remains unchanged at stable for Banque Accord and CFF and negative for Credit Logement. See below for a comprehensive list of rating actions. To reflect its views of a moderate increase in economic risks in France's banking industry, Standard & Poor's has changed its economic risk score to '3' from '2'. However, the Banking Industry Country Risk Assessment (BICRA) for France (AA+/Negative/A-1+) remains in group 2 following this action, as we have not changed our industry risk score. (Watch the related CreditMatters TV segments titled "Standard & Poor's Revises Its BICRA On France" and "Standard & Poor's Revise Le BICRA De La France," dated Oct. 26, 2012.) In our view, the economic risks under which French banks operate are increasing, leaving French banks moderately more exposed to the potential of a more protracted recession in the eurozone (European Economic and Monetary Union). Our view of rising economic risks for France's banking sector also reflects the potentially limited, but still noteworthy, impact from an ongoing correction in the housing market. In particular, we have changed our assessments of the "economic resilience" and "economic imbalances" factors of France's BICRA. We now consider France's

2 economic resilience to be "low risk," compared with "very low risk" previously, and economic imbalances to be "intermediate risk," up from "low risk," as our criteria define these terms. We have not changed our assessment of "credit risk in the economy," which remains "low," or the three components we consider in assessing industry risk, which also remain "low." Overall, we continue to view the French economy as relatively stable, but we consider that its resilience to adverse external developments has been reduced. The constraints of a relatively high public debt burden, reduced external competitiveness, and persistent high unemployment are being aggravated in our view by the ongoing eurozone crisis, a more protracted recession across Europe, and lower domestic growth prospects. We consider that this economic environment, including the persistence of low interest rates, will put pressure on domestic revenue growth for French banks in We have revised our forecasts for growth in GDP (see "The Eurozone's New Recession--Confirmed," published Sept. 25, 2012) and total domestic loan growth to close to zero (adjusted for inflation) in , based on our view that France is no longer in an expansionary phase. We consider that the housing market in particular has entered into a "correction phase" (as defined in our criteria), although we expect this correction to be moderate. While we anticipate that house prices could fall 10% to 15% over the next two to three years, the impact on the banks and the economy should be limited because of the banks' underwriting policies, which we consider to be relatively conservative. Nevertheless, under our criteria the prospect for such a correction has led us to change our assessment of economic imbalances to "intermediate risk" from "low risk." Despite these rising risks, we think French banks will continue to benefit from sound domestic asset quality. In our view, credit risk in the economy is still "low," stemming from a combination of protective consumer regulation, households' cultural aversion to risk, and the prudent lending and selling practices of banks and financial intermediaries. Furthermore, corporate creditworthiness remains sound in our view. We expect only a limited increase in the domestic cost of risk to 40 basis points (bps) of systemwide domestic loans in , from an estimated 30 bps in In our view, France's regulatory standards and supervision are relatively strong. In particular, we consider the regulatory framework to be comprehensive, based on a broad definition of credit institutions, backed by effective and active supervision. We assess France's regulatory track record as "intermediate" (between strong and weak). Regulators have contributed to preventing any banking failures for more than a decade, and the French banking industry withstood the 2008 financial crisis. However, our assessment of France's regulatory track record has been negatively affected by the near failure of the Dexia group, and of Credit Immobilier de France (not rated), one of a few independent midsize players. Competitive dynamics in France's banking sector benefit in our view from the industry's "restrained" risk appetite, owing particularly to the participation of cooperative banks that in general do not seek to maximize return on equity, in our opinion. Although the French banking industry is relatively concentrated and competition has remained relatively balanced so far, there is a risk that competition could heat up as banks refocus their strategies on the domestic market. In our view, the operational and financial constraints that stem from the existence of regulated savings products, in particular "Livret A," are moderate and manageable by banks so far. As a tax-free savings scheme Livret A is very popular with households, but the features of this savings product are quite restrictive for banks in terms of rate setting and how these deposits can be used. Furthermore, reforms to the domestic market, in particular around a further rise in the Livret A ceiling amount that could make it more attractive to households, could jeopardize the capacity of the industry to compete for customer deposits at reasonable cost. Despite the exceptional volatility in many European markets, we assess France's domestic funding risk as "low" because of the system's adequate coverage of loans by deposits and moderate net external funding needs. Funding is also supported, in our view, by the banks' access to France's deep and diversified domestic capital markets, a track record of government-provided liquidity support when needed, and access to European Central Bank (ECB) funding operations. We expect our ratio for French banks' core deposits to loans, as defined in our BICRA criteria, to continue to improve in as deposits rise at a faster pace than loans.

3 Furthermore, banks are making progress on their strategies to boost capital and improve their funding mix, and maintain their large buffers of assets eligible for central bank funding. In our opinion, French banks have made improvements to their funding structures and regulatory capital ratios in recent quarters, which have helped them to maintain adequate access to international investors. However, given the persistence of the recession and doubts of investors about the future of the eurozone, we cannot rule out a change to our industry risk score if we considered that the current retrenchment of French banks from international business to the domestic market could heighten competitive risks in the system; or if fragile conditions in wholesale funding markets began to deteriorate significantly so as to jeopardize French banks' access to international investors. The lowering of our ratings on BNP Paribas and most of its "core" and "highly strategic" subsidiaries and on Cofidis and Banque Solfea reflects our view that these groups are more vulnerable to the impact of rising economic risks in the eurozone, particularly in France and countries in southern Europe due to their geographic concentrations in these markets. We have therefore lowered our stand-alone credit profiles (SACP) on them. The impact of the lowered SACP is not, in our view, offset by government support for BNP Paribas, or by shareholder support in the case of Cofidis and Banque Solfea. For further details on the number of notches of government support we recognize in the ratings on systemically important banks in countries like France, and the link with the sovereign rating and banks' SACP, see table 22 in "Banks: Rating Methodology And Assumptions," published Nov. 9, We have also lowered our SACP on RCI Banque and Banque Accord, taking into account their sizable international activities in countries that we consider to carry more risk than France. However, for RCI Banque and Banque Accord, the impact on the ratings is mitigated respectively by government support and parent support. Our rating affirmations primarily incorporate our opinion that the French banking industry continues to bear low risk. We have maintained our baseline assessment (the "anchor") on banks operating only in France at 'a-'. However, the possibility that industry risks for France's banking sector could substantially increase weigh on the anchor. The outlook revisions to negative on the ratings on Credit Mutuel, and on Exane, Socram Banque, Allianz Banque, CFCAL-Banque, and the negative outlook maintained on Banque Solfea are based on our view of possibly higher industry risks for France's banking sector. The negative outlooks on BPCE, Credit Agricole, and Societe Generale reflect the possibility that we could lower their respective long-term and short-term ratings if we consider that both the industry risk for France's banking sector has substantially increased and if we were also to lower our long-term unsolicited sovereign rating on France to 'AA'. Our negative outlook on La Banque Postale's long-term rating reflects the possible lowering of such rating if this scenario materializes. We base the negative outlook on BNP Paribas on the possibility that we could lower its long-term rating if we see a material aggravation in the French and eurozone economic and operating environments. All other things being equal, a negative revision of our industry risk score for France or the lowering of the sovereign rating by one notch would have no impact on the ratings on BNP Paribas. Our negative outlook on BPCE, Credit Agricole, Societe Generale, and BNP Paribas also factors in the possibility that the risks that we have identified for each of these banks could materialize before they have delivered a sufficient and sustainable increase in their capital positions to cushion any negative impact on their creditworthiness. Our negative outlook on RCI Banque and Cofidis reflects the fact that we could lower our ratings on the bank if, contrary to our current expectation, the banks are not able to respectively achieve a Standard & Poor's risk-adjusted capital (RAC) ratio above 10% and above 7% by Our revised economic risk scores for France--and other European countries earlier this year--have led us to lower our pro forma and projected RAC ratios (see "Bank Capital Methodology And Assumptions," published Dec. 6, 2010) for

4 some banks. For Banque Solfea, the impact of higher economic risk in France has, in our view, prompted a significant decline in its capital position as measured by our RAC ratio, which in turn has led us to lower its SACP. For BNP Paribas, BPCE, Credit Agricole, and Societe Generale capital and earnings remains a negative rating factor in our view. These banks have made strenuous efforts to improve their regulatory capital ratios, which are also reflected in our RAC ratios. Measures taken include retaining earnings and asset disposals, such as Credit Agricole's recent disposal of its Greek subsidiary, Emporiki. However, the rising economic risks offset part of the benefit of these improvements in the computation of our proforma and projected RAC ratios. We consider that the pace of capital improvement is not yet fast enough in our opinion for BNP Paribas, BPCE, Credit Agricole, and Societe Generale to reach a RAC ratio of 7% under our projected horizon. Nevertheless, if the improving trend continues, we could revise up our projected RAC ratio for BNP Paribas, Societe Generale, and Credit Agricole in the near term. This could contribute to an outlook revision to stable on these banks. We could lower our ratings on Credit Logement if we were to lower our long-term rating on France, all other things being equal, based on our assessment of government support, which we would drop to zero notches from one notch. Our ratings on other nongovernment-related systemically important French financial institutions would not be affected by a lowering of France's rating by one notch, all other things being equal and in accordance with our methodology. RELATED CRITERIA AND RESEARCH Group Methodology, April 22, 2009 Use Of CreditWatch And Outlooks, Sept. 14, 2009 Rating Government-Related Entities: Methodology And Assumptions, Dec. 9, 2010 Banks: Rating Methodology And Assumptions, Nov. 9, 2011 Banking Industry Country Risk Assessment Methodology And Assumptions, Nov. 9, 2011 Bank Capital Methodology And Assumptions, Dec. 6, 2010 Group Rating Methodology And Assumptions, Nov. 9, 2011 Bank Hybrid Capital Methodology And Assumptions, Nov. 1, 2011 Corporate Criteria--Parent/Subsidiary Links; General Principles; Subsidiaries/Joint Ventures/Nonrecourse Projects; Finance Subsidiaries; Rating Link To Parent, Oct. 28, 2004 Regulation Benefits Ratings On European Automakers' Captive Finance, May 18, 2006 General: Captive Finance Operations, April 17, 2007 Banking Industry Country Risk Assessment: France, July 9, 2012 French Banks Can Weather A Falling Housing Market, April 23, 2012 France (Republic of) March 29, 2012 The Eurozone's New Recession--Confirmed, Sept. 25, 2012 Buffeted By Recession, The Gap Between Western Europe's Core And Peripheral Banking Systems Widens, Oct. 4, 2012 Methodology For Mapping Short- And Long-Term Issuer Credit Ratings For Banks, May 4, 2010 RATINGS LIST Downgraded To From BNP Paribas Fortis Bank S.A./N.V. BGL BNP Paribas S.A. BNP Paribas Personal Finance BNP Paribas Securities Corp. BNP Paribas Securities Services A+/Negative/A-1 AA-/Negative/A-1+ BNP Paribas Cardif A/Negative/-- A+/Negative/-- Cardif Assurance Vie Cardif-Assurances Risques Divers A+/Negative/-- AA-/Negative/-- Financial Strength Rating A+/Negative/-- AA-/Negative/-- BNP Paribas (China) Ltd. A/Negative/A-1 A+/Negative/A-1

5 Greater China Regional Scale cnaa+/--/cna-1 cnaaa/---/cna-1+ Banque Solfea A-/Negative/A-2 A/Negative/A-1 Cofidis S.A. BBB+/Negative/A-2 A-/Stable/A-2 Ratings Affirmed; Outlook Action Banque Federative du Credit Mutuel Credit Industriel et Commercial Caisse Centrale du Credit Mutuel Caisse Federale du Credit Mutuel Nord Europe Credit Mutuel Arkea Caisse Federale du Credit Mutuel Antilles-Guyane Caisse Federale du Credit Mutuel de Maine-Anjou Basse Normandie Caisse Federale du Credit Mutuel Ocean A+/Negative/A-1 A+/Stable/A-1 La Banque Postale A+/Negative/A-1 A+/Stable/A-1 Allianz Banque A+/Negative/A-1 A+/Stable/A-1 BPCE Natixis S.A. BRED - Banque Populaire A/Negative/A-1 A/Stable/A-1 Compagnie Europeenne de Garanties et Cautions A/Negative/-- A/Stable/-- Societe Generale Credit du Nord S.A. Franfinance Komercni Banka A.S. SG Americas Securities LLC Societe Generale Bank & Trust A/Negative/A-1 A/Stable/A-1 Credit Agricole S.A. Credit Agricole Corporate and Investment Bank CA Consumer Finance Credit Lyonnais CACEIS Credit Agricole CIB Australia Ltd. Caisse Regionale de Credit Agricole Mutuel du Morbihan Caisse Regionale de Credit Agricole Mutuel du Languedoc Caisse Regionale de Credit Agricole Mutuel du Finistere Caisse Regionale de Credit Agricole Mutuel de l'anjou et du Maine Caisse Regionale de Credit Agricole Mutuel de Franche-Comte Caisse Regionale de Credit Agricole Mutuel de Champagne-Bourgogne Caisse Regionale de Credit Agricole Mutuel de Centre Loire Caisse Regionale de Credit Agricole Mutuel Sud-Mediterranee Caisse Regionale de Credit Agricole Mutuel Pyrenees-Gascogne Caisse Regionale de Credit Agricole Mutuel Paris Ile-de-France Caisse Regionale de Credit Agricole Mutuel Normandie Caisse Regionale de Credit Agricole Mutuel Nord de France Caisse Regionale de Credit Agricole Mutuel Charente Perigord Caisse Regionale de Credit Agricole Mutuel Brie Picardie Caisse Regionale de Credit Agricole Mutuel Alsace-Vosges Caisse Regionale de Credit Agricole Mutuel Alpes Provence Caisse Regionale de Credit Agricole Mutuel du Nord-Est Caisse Regionale de Credit Agricole Mutuel du Centre Ouest Caisse Regionale de Credit Agricole Mutuel des Savoie Caisse Regionale de Credit Agricole Mutuel des Cotes D'Armor Caisse Regionale de Credit Agricole Mutuel de la Touraine et du Poitou Caisse Regionale de Credit Agricole Mutuel de la Reunion Caisse Regionale de Credit Agricole Mutuel de la Guadeloupe Caisse Regionale de Credit Agricole Mutuel de Normandie-Seine Caisse Regionale de Credit Agricole Mutuel de Charente-Maritime Deux Sevres Caisse Regionale de Credit Agricole Mutuel de Centre-France Caisse Regionale de Credit Agricole Mutuel d'ille et Vilaine Caisse Regionale de Credit Agricole Mutuel d'aquitaine Feedback Americas [Select Region] Update Profile Logout General site search...

6 Caisse Regionale de Credit Agricole Mutuel Toulouse 31 Caisse Regionale de Credit Agricole Mutuel Sud Rhone-Alpes Caisse Regionale de Credit Agricole Mutuel Provence Cote d'azur Caisse Regionale de Credit Agricole Mutuel Centre-Est Caisse Regionale de Credit Agricole Mutuel Atlantique Vendee Caisse Regionale de Credit Agricole Mutuel Nord Midi-Pyrenees Caisse Regionale de Credit Agricole Mutuel de Loire-Haute Loire Caisse Regionale de Credit Agricole Mutuel de la Martinique-Guyane Caisse Regionale de Credit Agricole Mutuel Val de France Caisse Regionale de Credit Agricole Mutuel de Lorraine A/Negative/A-1 A/Stable/A-1 Exane S.A. Exane Derivatives S.N.C. A-/Negative/A-2 A-/Stable/A-2 RCI Banque DIAC S.A. BBB/Negative/A-2 BBB/Stable/A-2 Socram Banque A-/Negative/A-2 A-/Stable/A-2 Credit Foncier et Communal d'alsace et de Lorraine-Banque A/ Negative/A-1 A/Stable/A-1 Ratings Affirmed Banque Accord Credit Foncier de France Locindus S.A. Credit Logement A/Stable/A-1 A-/Stable/A-2 AA-/Negative/-- NB. This list does not include all ratings affected. Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at All ratings affected by this rating action can be found on Standard & Poor's public Web site at Use the Ratings search box located in the left column. Alternatively, call one of the following Standard & Poor's numbers: Client Support Europe (44) ; London Press Office (44) ; Paris (33) ; Frankfurt (49) ; Stockholm (46) ; or Moscow 7 (495) Primary Credit Analysts: Elisabeth Grandin, Paris (33) ; elisabeth_grandin@standardandpoors.com Sylvie Dalmaz, PhD, Paris (33) ; sylvie_dalmaz@standardandpoors.com Francois Moneger, Paris (33) ; francois_moneger@standardandpoors.com Secondary Contacts: Jesus Martinez, Madrid (34) ; jesus_martinez@standardandpoors.com Additional Contact: Aurelie Thiellet, Paris (33) ; aurelie_thiellet@standardandpoors.com Rayane Abbas, CFA, Paris (33) ; rayane_abbas@standardandpoors.com Nicolas Hardy, PhD, Paris (33) ; nicolas_hardy@standardandpoors.com Simon Outin, Paris (33) ; simon_outin@standardandpoors.com Constance Hauville, Paris (33) ; constance_hauville@standardandpoors.com Thierry Grunspan, Paris (33) ; thierry_grunspan@standardandpoors.com Financial Institutions Ratings Europe; FIG_Europe@standardandpoors.com No content (including ratings, credit-related analyses and data, 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 S&P. The Content shall not be used for any unlawful or unauthorized purposes. S&P, its affiliates, 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, 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

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