--Foreign currency Issuer Default Rating (IDR) at 'BB+';

--Local currency IDR at 'BBB-';

--National long-term rating at 'AAA(uy)';

--Support rating at 3.

The Rating Outlook is Stable.

The international ratings of HSBC Bank (Uruguay) are constrained by those of the sovereign. The bank's foreign currency IDR is at the country ceiling, while its local currency IDR is two notches above that of the Uruguayan sovereign. These ratings, along with the bank's support rating, reflect the bank's solid ownership structure and its shareholder's strong commitment to the bank.

HSBC Bank (Uruguay)'s operating revenues were strongly affected in 2008 by a sharp increase in non-interest expenses due to the expansion of its commercial network and the pressure on its net interest margin as a consequence of the rise in liquidity requirements and the fall in international interest rates that affected its placements in foreign banks. On the other hand, fees are growing strongly and the bank benefited from the impact on its balance sheet of the devaluation of the peso.

In 2007, the bank launched a growth plan, with ambitious targets in terms of market share in lending to local individuals and companies. This plan requires hefty investments that Fitch believes will affect the bank's profitability in the next two or three years but will then bear fruit.

Asset quality is healthy. At end-2008, past due loans (more than 60 days overdue, as per the local definition) represented only 0.3% of the total.

The primary funding sources are non-resident deposits, which made up 67.5% of total deposits at end-2008, the majority of these corresponding to Argentine depositors. Liquidity remains high, and is enhanced by credit lines available from HSBC USA.

The bank's capitalization is adequate. Although equity represented only 7.25% of total assets (or 16% of risk-weighted assets) at end-2008, Fitch believes that the strength of its parent compensates for this, as demonstrated by the various capital increases carried out since 2003.

HSBC Bank (Uruguay) offers personal banking services as well as commercial banking services to important clients of the HSBC Group. Bank (Uruguay) is fully owned by HSBC Latin America Holdings (UK) Limited, which in turn is a subsidiary of HSBC Holdings Plc.

Credit research on HSBC Bank (Uruguay) is available on the Fitch Ratings web site at www.fitchratings.com.

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.

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