Fitch: Allgemeine Hypothekenbank unaffected

Fitch Ratings said Allgemeine Hypothekenbank Rheinboden's announcement that it will report a net loss for the financial year 2006 of around €575 million is in line with the agency's expectations and has already been factored into the bank's ratings.

The agency said key contributors to the annual loss were the crystallization of losses on interest rate positions, arising from a legacy portfolio of derivatives, and the continued restructuring of the bank. The loss will be absorbed by silent participations to the tune of €56 million and by the bank's profit participation rights to an approximate amount of €104 million. The remainder of the loss, or around €415 million, will be allocated to the €442 million loss reserve carried forward, resulting in a total balance-sheet loss of €857 million.

The bank expects to break even in 2007 and aims to return to profitability in 2008, according to Fitch.

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