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TEXT-Fitch affirms Groupe BPCE rating, negative outlook

(The following statement was released by the rating agency)

Oct. 9 - Fitch Ratings has affirmed Groupe BPCE's (GBPCE), BPCES.A.'s and Natixis's Long-Term Issuer Default Ratings (IDRs) at 'A+'and Short-Term IDRs at 'F1+'. The Outlook on the Long-Term IDR is Negative. Atthe same time, Fitch has affirmed GBPCE's Viability Rating (VR) at 'a-'. A fulllist of rating actions is at the end of this comment.

RATING DRIVERS AND SENSITIVITIES - IDRS, SUPPORT RATING AND SUPPORT RATING FLOOR

GBPCE's and BPCE S.A.'s Long- and Short-Term IDRs, Support Ratings and SupportRating Floors are driven by Fitch's view that the probability of French statesupport, if required, is extremely high given the group's domestic importance.GBPCE is France's third-largest banking group by equity.

GBPCE's and BPCE S.A.'s Long- and Short-Term IDRs and Support Rating Floorswould be downgraded if Fitch perceived a weakening of the state's ability (asreflected in its rating) to support large French banks. GBPCE's and BPCE S.A.'sLong- and Short-Term IDRs and Support Rating Floors could also be downgraded ifFitch came to the conclusion that government support in France was being dilutedthrough a combination of regulatory, legal and political changes. The NegativeOutlook on GBPCE's and BPCE S.A.'s Long-Term IDRs mirrors that on the Frenchstate.

Fitch has affirmed Banque Populaire du Sud-Ouest's IDRs at 'A+' and 'F1+' andsimultaneously withdrawn the ratings, following its merger with Banque PopulaireCentre Atlantique. Banque Populaire Centre Atlantique has been renamed BanquePopulaire Aquitaine Centre Atlantique. The IDRs of Societe Centrale de CreditMaritime Mutuel have also been affirmed and simultaneously withdrawn as theentity is no longer affiliated to BPCE S.A.

RATING DRIVERS AND SENSITIVITIES - VR

GBPCE's VR reflects its strong retail franchise in its core market, modest riskappetite, good loan quality and acceptable capital ratios. The VR also takesinto account the group's dependence on wholesale funding.

GBPCE has a strong franchise in French retail banking, its core business.GBPCE's operating income is not reliant on corporate and investment bankingbusiness, and the reduced size of market activities in particular leads to lowerearnings volatility than for some large French banking groups. Nevertheless,earnings at Natixis are minimal when the contribution from its retailparticipation is stripped out, which along with the prospects for thissubsidiary constrain the VR.

GBPCE maintains acceptable asset quality, with one of the lowest non-performingloan ratios among large French banks (3.8% at end-June 2012) given itssignificant focus on the low-risk domestic retail segment. The moderate coverageof impaired loans is offset by adequate collateral. GBPCE's legacy assets arenow modest and generate low losses.

GBPCE has relatively high dependence on wholesale funding. Although declining,GBPCE has the highest loan-to-deposit ratio among the large French banks.Further significant reduction of this ratio may be constrained by two of itsmain subsidiaries, CFF and Natixis, being largely wholesale-funded. However,liquidity is not an issue for GBPCE, which runs an ample liquid asset portfoliothat could be used for repo in the market or with central banks.

GBPCE has significantly strengthened its capital ratios since 2009, which reachnow an acceptable level (9.18% Fitch core capital ratio at end-H112). Thisimprovement partly integrates the positive, although limited, impact of theremoval of the Basel transitional floor on risk-weighted assets at end-2011. AsGBPCE has fully repaid the hybrid instruments subscribed to by the French statein 2008/2009, and given its historically modest dividend pay-out ratio, thegroup will benefit from a higher capital generation potential through retainedearnings.

GBPCE's VR would benefit from reduced dependence on wholesale funding. It couldalso potentially be upgraded if the drag on earnings and funding from some ofthe wholesale-funded subsidiaries, Natixis and CFF, were softened. Conversely,material deterioration of group earnings or capital ratios, while not expected,could lead to a downgrade.

RATING DRIVERS AND SENSITIVITIES - IDRs OF SUBSIDIARIES

Due to the affiliation of most of GBPCE's subsidiaries to BPCE S.A., GBPCE'scentral body, their IDRs are aligned with those of their parent. Under theaffiliation, BPCE S.A. is legally committed to maintain adequate liquidity andsolvency for its subsidiaries. The affiliated subsidiaries' IDRs will thereforecontinue to move in tandem with those of GBPCE unless there is a change in theaffiliation status, which Fitch views as extremely unlikely. The affiliationwith BPCE S.A. concerned 121 entities at end-September 2012, including theBanque Populaire and Caisse d'Epargne et de Prevoyance networks as well as thegroup's primary banks (Natixis, CFF, Banque Palatine and BPCE InternationalOutre-Mer). Given Natixis's, Credit Foncier de France's and Banque Palatine'saffiliation to and extremely strong integration within GBPCE, they have not beenassigned a VR.

RATING DRIVERS AND SENSITIVITIES - SUBORDINATED DEBT AND OTHER HYBRID SECURITIES

Subordinated debt and other hybrids issued by BPCE S.A. and Natixis are allnotched down from GBPCE's VR in accordance with Fitch's assessment of eachinstrument's respective non-performance and relative loss severity riskprofiles, which varies significantly. Their ratings are primarily sensitive toany change in GBPCE's VR. Natixis's debt benefits from its affiliation with BPCES.A.

The rating actions are as follows:

GBPCE

Long-term IDR: affirmed at 'A+'; Outlook Negative

Short-term IDR: affirmed at 'F1+'

Viability Rating: affirmed at 'a-'

Support Rating: affirmed at '1'

Support Rating Floor: affirmed at 'A+'

BPCE S.A.

Long-term IDR: affirmed at 'A+'; Outlook Negative

Short-term IDR: affirmed at 'F1+'

Support Rating: affirmed at '1'

Support Rating Floor: affirmed at 'A+'

Senior unsecured debt: affirmed at 'A+'

BMTN programme: long-term affirmed at 'A+'

EMTN programme: long-term affirmed at 'A+' and short-term affirmed at 'F1+'

Innovative Tier 1: 'BB+'

Non-innovative Tier 1: 'BB+'

Lower Tier 2: 'BBB+'

Commercial paper: affirmed at 'F1+'

Natixis:

Long-term IDR: affirmed at 'A+'; Outlook Negative

Short-term IDR: affirmed at 'F1+'

Support Rating: affirmed at '1'

Senior unsecured debt: affirmed at 'A+'

Market linked notes: affirmed at 'A+emr'

Lower Tier 2: 'BBB+'

Hybrid capital instruments: 'BB+'

BMTN programme: long-term affirmed at 'A+'

EMTN programme: long-term affirmed at 'A+' and short-term affirmed at 'F1+'

Debt issuance programme guaranteed by Caisse des Depots et Consignations (CDC):long-term affirmed at 'AAA' and short-term affirmed at 'F1+'

Debt issuance programme guaranteed by BPCE S.A.: long-term affirmed at 'A+' andshort-term affirmed at 'F1+'

Senior unsecured debt guaranteed by Caisse des Depots et Consignations (CDC):affirmed at 'AAA'

Senior unsecured debt guaranteed by BPCE: affirmed at 'A+'

Commercial paper: affirmed at 'F1+'

NBP Capital Trust IPreferred stock: 'BB+'Credit Foncier de France

Long-term IDR: affirmed at 'A+'; Outlook Negative

Short-term IDR: affirmed at 'F1+'

Support Rating: affirmed at '1'

BMTN programme: long-term affirmed at 'A+'

EMTN programme: long-term affirmed at 'A+' and short-term affirmed at 'F1+'

Senior unsecured debt: affirmed at 'A+'

Commercial paper: affirmed at 'F1+'

Banque Palatine

Long-term IDR: affirmed at 'A+'; Outlook Negative

Short-term IDR: affirmed at 'F1+'

Support Rating: affirmed at '1'

BMTN Programme: affirmed at 'A+'

Certificate of Deposits: affirmed at 'F1+'

The following entities' Long-term IDRs of 'A+' and Short-term IDRs of 'F1+' havebeen affirmed. The Outlook is Negative

Banque Populaire Atlantique

Banque Populaire Bourgogne, Franche-Comte

Banque Populaire Aquitaine Centre Atlantique

Banque Populaire Cote d'AzurBanque Populaire d'AlsaceBanque Populaire de l'Ouest

Banque Populaire Lorraine Champagne

Banque Populaire des Alpes

Banque Populaire du Massif-Central

Banque Populaire du NordBanque Populaire du Sud

Banque Populaire Loire et Lyonnais

Banque Populaire Occitane

Banque Populaire Provencale et Corse

Banque Populaire Rives de Paris

Banque Populaire Val-de-France

BRED - Banque PopulaireCASDEN - Banque PopulaireGroupe Credit CooperatifCredit Maritime Mutuel

Caisse d'Epargne et de Prevoyance d'Alsace

Caisse d'Epargne et de Prevoyance Aquitaine Poitou Charentes

Caisse d'Epargne et de Prevoyance d'Auvergne et du Limousin

Caisse d'Epargne et de Prevoyance de Bourgogne Franche-Comte

Caisse d'Epargne et de Prevoyance Bretagne-Pays de Loire

Caisse d'Epargne et de Prevoyance Cote d'Azur

Caisse d'Epargne et de Prevoyance Ile-de-France

Caisse d'Epargne et de Prevoyance du Languedoc Roussillon

Caisse d'Epargne et de Prevoyance Loire-Centre

Caisse d'Epargne et de Prevoyance Loire Drome Ardeche

Caisse d'Epargne et de Prevoyance de Lorraine Champagne-Ardenne

Caisse d'Epargne et de Prevoyance de Midi Pyrenees

Caisse d'Epargne et de Prevoyance Nord France Europe

Caisse d'Epargne et de Prevoyance Normandie

Caisse d'Epargne et de Prevoyance de Picardie

Caisse d'Epargne et de Prevoyance Provence Alpes Corse

Caisse d'Epargne et de Prevoyance de Rhone Alpes

Banque Populaire du Sud-Ouest and Societe Centrale de Credit Maritime Mutuel

Long-and Short-term IDRs: affirmed at 'A+' and 'F1+' respectively andsimultaneously withdrawn

Credit Cooperatif:

Long-term IDR: affirmed at 'A+'; Outlook Negative

Short-term IDR: affirmed at 'F1+'

Senior unsecured debt: affirmed at 'A+'

BMTN Programme: affirmed at 'A+'

Commercial paper: affirmed at 'F1+'

Contact:

Primary Analyst (GBPCE and related entities, CFF)

Francois-Xavier MarchandAnalyst+33 1 44 29 91 46Fitch Ratings France S.A.S.60 rue de Monceau75008 Paris

Primary Analyst (Banque Palatine)

Julien NoizetAnalyst+44 20 35 30 13 51Fitch Ratings Limited30 North ColonnadeLondon, E14 5GN

Secondary Analyst (GBPCE and some related entities)

Eric DupontSenior Director+33 1 44 29 91 31

Secondary Analyst (Banque Palatine and CFF)

Sonia TrabelsiDirector+33 1 44 29 91 42Committee ChairpersonBridget GandyManaging Director+44 20 35 30 10 95

Media Relations: Francoise Alos, Paris, Tel: +33 1 44 29 91 22, Email:francoise.alos@fitchratings.com.

(Reporting By Hilary Russ)

((Hilary.Russ@thomsonreuters.com; (646) 223-7381; Reuters Messaging:hilary.russ.thomsonreuters.com@reuters.net))

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