LONDON/BARCELONA/MILAN – Fitch Ratings this week upgraded Greece’s EFG Eurobank Ergasias’s Issuer Default rating (IDR) to A from A- (A minus), its short-term rating to F1 from F2 and its individual rating to B from B/C. At the same time the agency affirmed the bank’s support rating at 2. Following the upgrade, the outlook on the bank’s IDR is now stable. The upgrade of Eurobank EFG’s ratings reflects the bank’s continued leading position in some of the banking sector’s fast-growing areas and broader business and geographical diversification, albeit in less developed countries in Central and Southeast Europe (CSEE). It also reflects its strengthened franchise, good underlying profitability and cost efficiency, healthy but increasing credit risk and its sound capital adequacy. Prospects for EFG Eurobank look good as the bank is well placed to take advantage of the continuing expanding banking markets in Greece and in CSEE, thanks to its modernized branch network, good IT systems and strong position in some of the system’s high-growth areas such as consumer and small business lending, and fund management. This should also be put in the context of a continued benign domestic economic environment with expected GDP growth above EU average levels. EFG Eurobank’s performance should also benefit from active cross-selling and growing diversification of earning streams. The key challenges for EFG Eurobank’s management will be to continue to gain market share and achieve economies of scale in an environment where competitive pressures are intensifying. EFG Eurobank also needs to prevent deterioration in its risk profile and capital adequacy, given that much of its domestic loan book is young and historical data are limited. In addition, certain volatility is brought about by its growing operations in the less advanced CSEE banking markets. However, helped by the improved economic conditions in most of the foreign countries where it is present, EFG Eurobank is also proving its capacity to manage its international operations without compromising its financial fundamentals. EFG Eurobank generates strong operating profitability, underpinned by healthy loan growth, particularly in the retail segment. The sound performance of its fund management and brokerage business also help boost and diversify revenues. The bank’s cost-to-income ratio improved to 47 percent at end-September 2006 from 48 percent at end 2005 and compares well internationally.