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TEXT-Fitch affirms Unicredit Bank AG at 'A+'

(The following statement was released by the rating agency)

Oct 9 - Fitch Ratings has affirmed UniCredit Bank AG's (HVB) Long-termIssuer Default Rating (IDR) at 'A+' with Stable Outlook, Short-term IDR at'F1+', Support Rating Floor at 'A+', Support Rating at '1' and Viability Rating(VR) at 'a-'. A full list of rating actions is at the end of this rating actioncommentary.

RATING DRIVERS AND SENSITIVITIES - IDRs, SUPPORT RATING AND SUPPORT RATING FLOORHVB's Long-term IDR is at its Support Rating Floor and could be downgraded ifFitch concluded that government support in Germany was being diluted through acombination of regulatory, legal and political changes. The Support Ratingreflects Fitch's view of an extremely high likelihood of support by the FederalRepublic of Germany if needed. However, given its ownership structure, Fitchbelieves HVB would first look to its 100% owner, UniCredit S.p.A.

(UC;

'A-'/Negative/'F2') for support, if needed.

RATING DRIVERS AND SENSITIVITIES - VRHVB's VR reflects the bank's standalone credit strength, which benefits from itswell-established domestic corporate and investment banking (CIB) franchise andstrong capitalisation (Fitch core capital ratio at end-H112: 17.3%), whichcompensates for the intrinsic earnings volatility of these activities. HVB'ssolid capitalisation is the key rating strength and Fitch expects the bank'scapital position to remain strong under forthcoming regulatory changes and theforecast business development. Therefore, HVB's VR is highly sensitive to anyweakening in core capital ratios.

While the loan/deposit ratio has been trending downwards (end-H112: 129%), itstill shows some reliance on wholesale funding. However, sources seem welldiversified by type and geography. HVB prudently manages its liquidity and hassubstantial counterbalancing capacity, based on its pool of central bankeligible and unencumbered assets.

HVB's intragroup exposure to other parts of the UC group has decreasedsubstantially since the beginning of 2012. Excluding business-driven exposure,which arises from HVB's role as the group's hub for CIB business, HVB's trueupstream funding, which describes the intragroup placement of HVB's excessliquidity, stood at EUR4.7bn at end-H112.

However, despite reducing intragroup exposure, being part of UniCredit groupmight pose potential contagion risk for HVB's funding franchise from negativedevelopments in the European sovereign crisis, which cannot be fully excluded.

HVB's credit profile is also characterised by income volatility due to thebank's CIB focus, and moderate levels of sustainable operating profitability.However, Fitch expects income volatility to reduce, as the bank increases itsfocus on customer-driven business and continues to reduce riskier exposures suchas private equity and constrain businesses like leveraged finance and shiplending.

HVB's CIB business continues to drive financial performance, with profitcontribution from retail and private banking remaining small. Fitch acknowledgesthat retail banking operations provide HVB with access to more stable retaildeposits. However, a commercial benefit cannot be easily quantified.

Reflecting the German focus of its exposures, HVB's asset quality continued tobenefit from the resilient German economy. Fitch expects this stable trend tocontinue in the coming quarters, but given the fragile economic situation, thistrend could quickly reverse. In this context, some risk pockets remain,including risks from high concentrations in the bank's leveraged buyoutexposure, project finance business and ship lending. Non-strategic assets arebeing worked out and the bank continues to reduce its exposure to riskier assetclasses.

SUBORDINATED DEBT AND OTHER HYBRID SECURITIESThe ratings of HVB's hybrid capital instruments (issued through Funding Trusts Iand II) reflect the financial standing of the UniCredit group. While Fitchacknowledges that the German regulator could demand a deferral of coupon paymenton these profit-linked instruments in line with the terms and conditions of theinstruments, the agency does not anticipate such intervention in light of thebank's solid standalone financial profile.

SUBSIDIARY AND AFFILIATED COMPANY RATING DRIVERS AND SENSITIVITIESUniCredit US Finance LLC is wholly owned by HVB. The Short-term rating of itsCommercial Paper Programme is equalised with HVB's Short-term IDR and reflectsthe likelihood of systemic support. The Short-term rating of the commercialpaper programme is sensitive to the same factors that might drive a change inHVB's IDR.

The rating actions are as follows:

UniCredit Bank AGLong-term IDR affirmed at 'A+'; Outlook StableShort-term IDR affirmed at 'F1+'Viability Rating affirmed at 'a-'Support Rating Floor affirmed at 'A+'Support Rating affirmed at '1'Market Linked Securities affirmed at 'A+emr'Senior unsecured Certificates of Deposit affirmed at 'F1+'Senior unsecured Debt Issuance Programme affirmed at 'A+'Senior unsecured Debt Issuance Programme affirmed at 'F1+'Senior unsecured BMTN Programme affirmed at 'A+'Senior unsecured EMTN Programme affirmed at 'A+'Senior unsecured EMTN Programme affirmed at 'A+(Exp) 'Senior unsecured EMTN Programme affirmed at 'F1+(Exp) 'Senior unsecured notes affirmed at 'A+'Senior unsecured GTD notes affirmed at 'A+'Short-term debt notes affirmed at 'F1+'Subordinated notes affirmed at 'BBB+'Unicredit US Finance LLCCommercial Paper Programme affirmed at 'F1+'HVB Funding Trusts I and IIHybrid Notes affirmed at 'BB+'

Additional information is available on

. The ratings abovewere solicited by, or on behalf of, the issuer, and therefore, Fitch has beencompensated for the provision of the ratings.

Applicable criteria, 'Global Financial Institutions Rating Criteria,' dated 15August 2012 are available at

.Applicable Criteria and Related Research:Global Financial Institutions Rating Criteria(New York Ratings Team)

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