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        T R O U B L E D   C O M P A N Y   R E P O R T E R


                           E U R O P E


             Monday, October 14, 2013, Vol. 14, No. 203


                            Headlines


F R A N C E


REMY COINTREAU: S&P Raises CCR to 'BBB-' From 'BB+'



G E R M A N Y


FRANZ HANIEL: Moody's Raises CFR & Sr. Unsec. Ratings to Ba1
FRESENIUS SE: S&P Affirms 'BB-' Rating on Sub. Debt Facilities
GERMAN RESIDENTIAL: DBRS Assigns 'BB' Rating to Class F Notes



I R E L A N D


TITAN EUROPE: Fitch Lowers Rating on Class B Notes to 'Csf'



N E T H E R L A N D S


BRUCKNER CDO I: Moody's Lifts Ratings on 2 Note Classes From Ba1
PALLAS CDO: Fitch Affirms 'CC' Ratings on Two Note Classes



N O R W A Y


ALBAIN MIDCO: S&P Assigns Preliminary 'B' CCR; Outlook Stable



P O R T U G A L


NOSTRUM MORTGAGES: S&P Raises Rating on Class A Notes From 'BB'



S L O V A K   R E P U B L I C


SBERBANK SLOVENSKO: Fitch Affirms 'bb-' Viability Rating



S W I T Z E R L A N D


SCHMOLZ + BICKENBACH: S&P Raises CCR to 'B'; Outlook Stable



U K R A I N E


FINTEST TRADING: Fitch Affirms LT Issuer Default Ratings at 'B'



U N I T E D   K I N G D O M


HASTINGS INSURANCE: S&P Assigns 'B-' Issuer Credit Rating



X X X X X X X X


* Market Volatility to Drag on Banks' Securities Revenue



                            *********



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F R A N C E
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REMY COINTREAU: S&P Raises CCR to 'BBB-' From 'BB+'
---------------------------------------------------
Standard & Poor's Ratings Services said it had raised its long-
term corporate credit rating on French spirits manufacturer Remy
Cointreau S.A. to 'BBB-' from 'BB+'.  The outlook is stable.


At the same time, S&P assigned an 'A-3' short-term corporate
credit rating to the company.


S&P also withdrew the recovery rating of '3' on Remy Cointreau's
unsecured notes because its recovery rating methodology does not
apply if the ratings are 'BBB-' or higher.


The upgrade primarily reflects the sustainability of Remy
Cointreau's solid credit metrics.  The Standard & Poor's-adjusted
ratio of funds from operations (FFO) to debt improved to 62% in
March 2013 from 52% in March 2012, and debt to EBITDA remains at
about 1.0x.  S&P continues to view Remy Cointreau's financial
policy as moderate, with a selective expansion strategy and a
clear focus on organic growth translating into important
investments in brand recognition.  Despite strong metrics, the
company has not announced any share buybacks, and 80% of the 2013
dividend was paid in shares, attesting to the shareholders'
support.


S&P expects Remy Cointreau to preserve its credit quality and
continue posting adjusted FFO to debt of about 40% in the next 24
months.  Nevertheless, S&P notes negative organic revenue growth
of -2.3% in the quarter ended June 30, 2013, and expect growth to
stay negative in the second quarter, notably as the impact of the
Chinese government's anti-gifting campaign will continue to
penalize ultra-premium products.  S&P also believes the stellar
growth rates of past years are not sustainable.  Still, Remy
Cointreau has headroom under its credit metrics, and S&P's base
case for fiscal year ending March 31, 2014, is for mid-single-
digit revenue growth and a stable adjusted EBITDA margin of about
21.5%.


S&P continues to view Remy Cointreau's business risk profile as
"fair," based on its narrow product diversification compared with
leading peers, with heavy reliance on two key brands Remy Martin
(cognac) and Cointreau (liqueur).  Also, despite a 30% reported
operating margin in the cognac division, Remy Cointreau reports
lower margins than peers, notably because it distributes some
brands on behalf of third parties through its distribution
network.  The partner-brands distribution activity, which
represented 20% of revenue in fiscal 2013, posts low operating
margins of 1.5%-2%.  That said, S&P acknowledges the group's
leading positions in the ultra-premium cognac segment, its well-
balanced geographic diversification, and proven capacity to
improve the product mix.


The stable outlook on Remy Cointreau reflects S&P's anticipation
that stable margins and a continued moderate financial policy will
result in adjusted FFO to debt consistently at about 40%.


S&P could upgrade Remy Cointreau if it continues to reinforce its
business risk profile through more diversification outside the
core cognac business, while maintaining conservative financial
metrics.  A higher rating would also require stronger
discretionary cash flow generation.


An aggressive shareholder remuneration policy or a large, debt-
funded acquisition could have negative implications for the
ratings, especially given the sector's high acquisition multiples.
A continuous softening of market conditions that pushed the
adjusted FFO-to-debt ratio consistently below 40% would likely
lead to a downgrade.  S&P will be monitoring Remy Cointreau's
performance in China closely.



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G E R M A N Y
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FRANZ HANIEL: Moody's Raises CFR & Sr. Unsec. Ratings to Ba1
------------------------------------------------------------
Moody's Investors Services has upgraded the corporate family
rating (CFR) to Ba1 from Ba2 and to Ba1-PD from Ba2-PD the
Probability of Default Rating (PDR) of Franz Haniel & Cie. GmbH.
Concurrently, the senior unsecured ratings of Haniel and its
subsidiaries have been upgraded to Ba1/(P)Ba1. The outlook on all
ratings is stable.


Ratings Rationale:


The upgrade acknowledges the significant improvement in Haniel's
loan to value ratio facilitated by the company's effort in
reducing its net debt and an increased portfolio valuation.


Moody's notes positively that Haniel was able to reduce its debt
at the holding from EUR2.4 billion last year to around EUR1.8
billion as of September 2013. Consequently, Haniel's loan to value
ratio, as adjusted by Moody's, has improved to around 36%,
corresponding to around 28% on an as reported basis. A metric
which is well within Moody's upgrade trigger level and expected to
improve even further once the recently announced Xella Vendor loan
refinancing will be implemented. Pro-forma for the planned
disposal of Xella's vendor loan Moody's calculates a loan to value
ratio, as adjusted by Moody's, of around 34% and 26% on an as
reported basis. The announcement builds on the recent track record
of reducing the portfolio size to facilitate deleveraging. It
follows Haniel's reduction of stakes in Metro and Celesio
(ownership reduced by 4% and 5% respectively) as well as a
reduction in its ownership in Takkt from 70% to 50%. Even though
cash interest cover remains relatively weak (i.e. around 1.0x),
the position is partly mitigated by the fact that no dividend was
paid to Haniel's shareholders in 2013.


Haniel's rating is still benefitting from a strong liquidity
profile with around EUR1,440 million of undrawn committed
bilateral credit lines available. The nearest bigger maturity of
third party debt relates to the outstanding balance of the
EUR472 million bond due in October 2014. The remaining maturity
profile of other bonds extends into 2017/18 and provides
significant timing flexibility to withstand short-term volatility
in asset prices.


The stable outlook reflects Moody's expectation of Haniel being
able to retain its loan-to value ratio at or below 35%, which
corresponds to around 25% on the reported basis and keep its
normalized cash cover sustainably at or above 1.0x.


An upgrade to Baa3 would require Haniel to continue to reduce the
loan-to-value ratio sustainably below 30%, improve its cash cover
to materially towards or above 2.0x and have a more diversified
portfolio.


Negative pressure could be exerted on the rating in the event of a
deterioration of market leverage metrics above 40%, and/or failing
to maintain a strong liquidity buffer via timely extension of
maturing bilateral banking facilities. Continued negative cash
cover would also put negative pressure on the rating.


Based in Duisburg, Germany, Franz Haniel & Cie. GmbH is a large
family-owned investment company, with diversified industrial
interests, which generated consolidated sales of EUR 26.3 billion
in the year to December 2012.



FRESENIUS SE: S&P Affirms 'BB-' Rating on Sub. Debt Facilities
--------------------------------------------------------------
Standard & Poor's Ratings Services said that it affirmed its
'BBB-', 'BB+', and 'BB-' issue ratings on the senior secured,
senior unsecured, and subordinated debt facilities issued by
Germany-based health care group Fresenius SE & Co. KGaA (FSE) and
its financing subsidiaries Fresenius Finance B.V., Fresenius
Finance II B.V., Fresenius U.S. Finance I Inc., and Fresenius U.S.
Finance II Inc.


The issue ratings were affirmed despite the proposed significant
increase of debt to finance the acquisition of the majority of
Rhon-Klinikum AG's hospitals for EUR3.07 billion.  Standard &
Poor's will review the recovery ratings again when more details
emerge regarding the financing of the transaction, which is
expected to close by the end of this year.  No impact is expected
on the issue ratings, however.



GERMAN RESIDENTIAL: DBRS Assigns 'BB' Rating to Class F Notes
-------------------------------------------------------------
DBRS Inc. has assigned provisional ratings to the following
classes of Commercial Mortgage-Backed Floating-Rate Notes due
November 2024 (collectively, the Notes) to be issued by German
Residential Funding
2013-2 Limited:


   -- AAA (sf) to Class A
   -- AA (sf) to Class B
   -- A (sf) to Class C
   -- BBB (sf) to Class D
   -- BBB (low) (sf) to Class E
   -- BB (high) (sf) to Class F


All trends are Stable.


German Residential Funding 2013-2 Limited is a securitization of a
Senior Loan advanced under three Facilities.  Facility A1, A2 and
Facility A3 have a combined balance of EUR699,700,000.  All of the
Facilities are cross-defaulted with each other.  The fixed-rate A1
and A2 Facilities will have a combined initial balance of
EUR664,714,869 and the floating-rate A3 Facility will have an
initial balance of EUR34,985,131. Each of the Facilities is being
made to three Borrowers, all of which are subsidiaries of the
Sponsor.  The Sponsor is GAGFAH S.A. (GAGFAH), one of the largest
residential property companies in Germany.  The transaction is
arranged by Bank of America Merrill Lynch
and Deutsche Bank for the benefit of the Sponsor, with the purpose
of providing capital to refinance the existing facilities and pay
respective closing costs.


The collateral portfolio for the transaction consists of 22,849
residential units, 79 commercial units, 5,026 parking units and
1,075 other units (Excluding own-used units).  The residential and
commercial units represent a total rentable area of 1,400,706
square meters. All of the properties are located in Germany.
Property management services for the portfolio are provided by a
subsidiary of the Sponsor.


The final legal maturity of the Notes is in November 2024, six
years beyond the maturity of the loans, if no extension option is
exercised by the Borrower or the Servicer.  This is believed to be
sufficient time to enforce and repay bondholders, given the unique
security structure and the property's jurisdiction.


Finalization of ratings is contingent upon receipt of final
documents conforming to information already received by DBRS.



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I R E L A N D
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TITAN EUROPE: Fitch Lowers Rating on Class B Notes to 'Csf'
-----------------------------------------------------------
Fitch Ratings has downgraded Titan Europe 2006-3 plc's class A and
B notes, and affirmed the others, as follows:


EUR227.0m Class A (XS0257767631) downgraded to 'CCCsf' from 'Bsf';
Recovery Estimate 90%


EUR237.5m Class B (XS0257768522) downgrade to 'Csf' from 'CCsf';
Recovery Estimate (RE) 0%


EUR34.2m Class C (XS0257769090) affirmed at 'Dsf'; RE0%


EUR0m Class D (XS0257769769) affirmed at 'Dsf'; RE0%


Key Rating Drivers


The downgrades are driven by the heightened uncertainty concerning
the largest loan in the pool, Target, in relation to the legal
final maturity of the notes in July 2016. The repayment of the
class A notes is intrinsically linked to the prospects of this
loan, since at EUR232.1 million it accounts for 47% of the pool
balance.


After informing the servicer in January 2013 of its inability to
repay the loan at maturity (July), the borrower proposed a
discounted pay off (DPO) of 55% of par (which was subsequently
rejected by the servicer). In the meantime, the borrower had
opened pre-insolvency safeguard proceedings, in light of which
Fitch downgraded the notes in June to reflect growing concerns
about delays arising from this loan. In July, the borrower
proposed two further options: (i) a DPO of 55% to be paid over 18
months to allow the borrower to procure the funds required; and
(ii), a repayment plan scheduled over nine years and involving a
capital expenditure program of EUR56 million.


Fitch understands that the servicer has made a counter-proposal in
which in return for a prompt collateral disposal, recovery
proceeds over the portfolio's current value of EUR206.7m would be
split between the issuer and the borrower 50:50 (this has been
rejected). Ongoing negotiations are taking place under a court-
appointed administrator, reflecting the borrower's safeguard
status. In Fitch's view, both borrower-sponsored scenarios would
impair the class A notes, one by imposing a haircut and the other
by extending the debt beyond final maturity without adequate
compensation.


A DPO of 55% is significantly below the portfolio's current value,
which was estimated in April 2013 (although not disclosed to Fitch
when it downgraded the notes in June). The reported value is
almost 30% below what was estimated only 15 months earlier in
December 2011. Such heavy discounting would impose a significant
loss for the class A noteholders.


Any plan that involves delaying loan resolution beyond July 2016
would represent a material default for noteholders. Compounding
this, as long as the loan is in safeguard, Fitch understands that
latent capital gains tax could crystallize in a position pari
passu with the notes, and while this liability will have reduced
in line with portfolio value, it would nevertheless hamper net
recoveries from asset sales.


Fitch understands that the administrator will apply for a renewal
of the recently ended six-month observation period to allow for
continued consultation between lenders and borrowers while
prolonging a moratorium on all borrower accounts. This moratorium,
which has blocked payments of interest under the loan, has been a
large contributor to repeated drawdowns by the issuer on its
liquidity facility. As of the most recent interest payment date
(IPD) in July, available liquidity had fallen to EUR1.35m, which
in all likelihood will not cover interest on the class A notes at
the next IPD, leading to a note event of default. While shortfalls
on this class should eventually be recovered, timing is subject to
the same degree of uncertainty driving the downgrades.


The remaining six loans, which are all on the servicer's
watchlist, continue to perform poorly, albeit broadly in line with
Fitch's expectations at the time of its rating action in June.


Rating Sensitivities


Should either of the borrower's proposals prevail, the notes would
default, whereas should the servicer be granted control over the
recovery process, the class A notes could be repaid in full.
Accordingly indications of how the balance of power evolves over
time will guide Fitch's rating actions between now and legal final
maturity in July 2016.



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N E T H E R L A N D S
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BRUCKNER CDO I: Moody's Lifts Ratings on 2 Note Classes From Ba1
----------------------------------------------------------------
Moody's Investors Service announced that it has upgraded the
ratings of the following notes issued by Bruckner CDO I B.V.:


Issuer: Bruckner CDO I B.V.


    EUR177.5M Class A-1 Secured Floating Rate Notes, Upgraded to
Aa3 (sf); previously on Nov 11, 2010 Downgraded to A3 (sf)


    EUR28.75M Class A2-1 Secured Floating Rate Notes, Upgraded to
Baa2 (sf); previously on Nov 11, 2010 Downgraded to Ba1 (sf)


    EUR8.5M Class A2-2 Secured Fixed Rate Notes, Upgraded to Baa2
(sf); previously on Nov 11, 2010 Downgraded to Ba1 (sf)


Moody's also affirmed the ratings of the following notes issued by
Bruckner CDO I B.V.:


    EUR10.25M Class B Secured Floating Rate Notes, Affirmed B3
(sf); previously on Nov 11, 2010 Downgraded to B3 (sf)


    EUR4.6M Class C-1 Deferrable Interest Secured Floating Rate
Notes, Affirmed Caa3 (sf); previously on Nov 11, 2010 Downgraded
to Caa3 (sf)


    EUR1.15M Class C-2 Deferrable Interest Secured Fixed Rate
Notes, Affirmed Caa3 (sf); previously on Nov 11, 2010 Downgraded
to Caa3 (sf)


    EUR2.6M Class D-1 Deferrable Interest Secured Floating Rate
Notes, Affirmed Ca (sf); previously on Nov 11, 2010 Downgraded to
Ca (sf)


    EUR8.4M Class D-2 Deferrable Interest Secured Fixed Rate
Notes, Affirmed Ca (sf); previously on Nov 11, 2010 Downgraded to
Ca (sf)


    EUR6.3M Class Q Combination Notes, Affirmed Ca (sf);
previously on Nov 11, 2010 Downgraded to Ca (sf)


    EUR7M Class R Combination Notes, Affirmed Ca (sf); previously
on Nov 24, 2009 Downgraded to Ca (sf)


    EUR10.1M Class S Combination Notes, Affirmed Ca (sf);
previously on Nov 11, 2010 Downgraded to Ca (sf)


This transaction is a managed cash CDO of European Structured
Finance ("SF") assets, with exposure to ABS credit card and auto
loans (28%), CLO (28%), RMBS(27%),SME (9%) and CMBS (8%)


Ratings Rationale:


Moody's explained that the rating actions taken are the result of
the deleveraging of the transaction and the reduced risk for the
transaction of experiencing an event of default. The Class A1
notes have repaid 85% of their initial principal balance and have
a residual life of less than 2 years. As a result of the
deleveraging, the Class A/B Par Value Ratio has increased by 2%
since January of this year to a current 109.55%. An event of
default may occur due to the failure, on any measurement date, of
the Class A/B Par Value Ratio Test to be equal or greater than
100%. During the occurrence and continuance of an event of
default, the Class A1 Note holders, the controlling creditors of
the transaction, are entitled to direct the Trustee to take
particular actions including liquidation of the portfolio assets.
Moody's expects Class A/B Par Value Ratio Test to further improve
the next year.


In the process of determining the final rating, Moody's took into
account the results of a number of sensitivity analyses:


1) Sovereign Credit Risk Sensitivity - Moody's considered a model
run where assets domiciled in Italy, Spain, Portugal, and Ireland
amounting to approximately 36% of the pool, were stressed by one
notch.


The corresponding model outputs are consistent with the ratings
assigned.


Moody's notes that this transaction is subject to a high level of
macroeconomic uncertainty, which could negatively impact the
ratings of the notes, as evidenced by uncertainties of credit
conditions in the general economy: especially as 36% of the
portfolio is exposed to obligors located in Portugal, Ireland,
Spain and Italy. The transaction's performance may also be
impacted either positively or negatively by general macro
uncertainties such as those surrounding future housing prices,
pace of residential mortgage foreclosures, loan modification and
refinancing, unemployment rates and interest rates.


In rating this transaction, Moody's supplemented the model runs by
using CDOROM(TM) to simulate the default and recovery scenario for
each assets in the portfolio. Losses on the portfolio derived from
those scenarios have then been applied as an input in the Moody's
EMEA Cash-Flow model to determine the loss for each tranche. In
each scenario, the corresponding loss for each class of notes is
calculated given the incoming cash flows from the assets and the
outgoing payments to third parties and noteholders. By repeating
this process and averaging over the number of simulations, an
estimate of the expected loss borne by the notes is derived. The
Moody's CDOROM(TM) relies on a Monte Carlo simulation which takes
the Moody's default probabilities as input. Each asset in the
portfolio is modelled individually with a standard multi-factor
model reflecting Moody's asset correlation assumptions. The
correlation structure implemented in CDOROM(TM) is based on a
Gaussian copula. As such, Moody's analysis encompasses the
assessment of stressed scenarios.


In addition to the quantitative factors that are explicitly
modeled, qualitative factors are part of the rating committee
considerations. These qualitative factors include the structural
protections in each transaction, the recent deal performance in
the current market environment, the legal environment, specific
documentation features, the collateral manager's track record, and
the potential for selection bias in the portfolio. All information
available to rating committees, including macroeconomic forecasts,
input from other Moody's analytical groups, market factors, and
judgments regarding the nature and severity of credit stress on
the transactions, may influence the final rating decision.



PALLAS CDO: Fitch Affirms 'CC' Ratings on Two Note Classes
----------------------------------------------------------
Fitch Ratings has affirmed Pallas CDO II BV's notes, as follows:


Class A-1-a (ISIN XS0268818209): affirmed at 'BBB-sf'; Outlook
Negative


Class A-1-d (ISIN XS0271520669): affirmed at 'BBB-sf'; Outlook
Negative


Class A-2 (ISINXS0268904546): affirmed at 'B+sf'; Outlook Negative


Class B (ISINXS0268818548): affirmed at 'B-sf'; Outlook Negative


Class C (ISIN XS0268818894): affirmed at 'CCCsf'


Class D-1-a (ISIN XS0268819199): affirmed at 'CCsf'


Class D-1-b (ISIN XS0268819272): affirmed at 'CCsf'


Key Rating Drivers


The affirmation reflects levels of credit enhancement (CE)
commensurate with the ratings. The increase in CE available to the
notes has offset the deterioration in the portfolio's credit
quality since the last review in November 2012.


The senior class A-1-a and A-1-d notes have paid down further over
the past year and stood at 76.3% of their original notional as of
August 2013. Deleveraging has been possible due to both the
natural amortization of the portfolio and the interest diversion
caused by the breach of the class D over-collateralization (OC)
test and the deleveraging ratio test. All other OC tests and the
interest coverage test have been passing since end-2010, but with
reduced cushions.


Assets rated 'CCCsf' or below have increased since the last review
to 5.4% from 3.6% of the outstanding portfolio balance. Assets
rated below 'BB+sf' now represent 31.7% of the portfolio, up from
26.6% in November 2012. One more defaulted asset has been reported
over the year, thus the transaction at the moment inventories
EUR3.4m of defaults.


The Negative Outlooks on the notes continue to reflect the
increased concentration in peripheral countries, as 48.0% of the
assets are located in Spain, Portugal, Italy and Greece. This has
increased from 44.5% as of the last review. Fitch's view for
structured finance assets on those countries remains negative, as
do the Outlooks on the notes.


In addition, the transaction features an additional event of
default if the class A OC test drops below 100%, and additional
downgrades of the assets could see this ratio further deteriorate.
Although Fitch's calculation of the available cushion does not
indicate immediate risk of triggering an event of default, this
test has deteriorated over the past two years to 12.6% from 13.1%
in 2012 and 14.0% in 2011. If an event of default is triggered,
the senior noteholders will have the option to either cure the
event of default or accelerate the transaction, exposing it to
additional market risk.


Pallas CDO II BV is a cash arbitrage securitization of structured
finance assets. The portfolio is concentrated in RMBS assets
(56.1%) and CMBS (25.3%). Other assets in the pool are corporate
CDOs (15.6%) and commercial ABS (2.9%).


Rating Sensitivities
Fitch has tested the impact on the ratings of the notes of a
downgrade by one rating category on the assets which currently
have a Negative Outlook.


If these assets were downgraded by one category, the notes'
ratings would not be affected when using Fitch's expected
maturities. When bringing the maturities of the assets to their
legal maturity date, the stress would result in a downgrade of the
rated notes of up to one notch.



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N O R W A Y
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ALBAIN MIDCO: S&P Assigns Preliminary 'B' CCR; Outlook Stable
-------------------------------------------------------------
Standard & Poor's Ratings Services said that it assigned its
preliminary 'B' long-term corporate credit rating to Norway-based
producer of salmonid feed Albain Midco Norway AS (EWOS).  The
outlook is stable.


At the same time, S&P assigned its preliminary issue rating of 'B'
to the proposed EUR300 million and Norwegian krone (NOK) 1 billion
of senior secured notes, due 2020, to be issued by EWOS'
subsidiary Albain Bidco Norway AS.  The preliminary recovery
rating on the notes is '3', indicating S&P's expectation of
meaningful (50%-70%) recovery in the event of a payment default.


In addition, S&P assigned its preliminary issue rating of 'CCC+'
to the proposed NOK1.04 billion privately placed subordinated
notes, due 2021, to be issued by EWOS. The preliminary recovery
rating on the subordinated notes is '6', indicating S&P's
expectation of negligible (0%-10%) recovery in the event of a
payment default.


The final ratings are subject to the successful closing of the
proposed issuance and depend on our receipt and satisfactory
review of all final transaction documentation.  Accordingly, the
preliminary ratings should not be construed as evidence of the
final ratings.  If the final debt amounts, the assumed interest
rates, or the terms of the final documentation materially depart
from the documentation we have already reviewed, or if S&P do not
receive the final documentation within what it considers to be a
reasonable time frame, S&P reserves the right to withdraw or
revise its ratings.


The ratings on EWOS reflect S&P's view of the company's aggressive
capital structure as a result of its ownership by private equity
groups Altor Fund III and Bain Capital Europe Fund III, L.P.  S&P
assess EWOS' financial risk profile as "highly leveraged" under
its criteria.  EWOS plans to raise EUR300 million and NOK1 billion
of senior secured notes, and NOK1.04 billion of privately placed
subordinated notes, to finance Altor Fund III's and Bain Capital
Europe Fund III's purchase of EWOS from its parent, Norway-based
fish farming group Cermaq.  The purchase price is NOK6.6 billion.


"We assess EWOS' business risk profile as "weak" under our
criteria.  We base our view on EWOS' operations in an industry
that is closely correlated with the salmonid farming industry and
its demand for salmonid feed.  The amount of feed that the farmed
fish consume depends on the size and quality of the fish
inventories.  Inventories of farmed salmonids are determined by
the lifecycle of the farmed fish, mortality rates, and harvesting.
As such, demand for salmonid feed can decrease with fluctuating
water temperatures or outbreaks of disease," S&P said.


In S&P's view, EWOS will sustain positive underlying revenue
growth at least in line with expected growth in the global supply
of Atlantic salmon of 3%-4%, while maintaining an EBITDA margin of
at least 7% over the next 12-18 months.  This assumes that the
company will be able to continue to pass on raw material price
increases to its customers, while optimizing its product portfolio
to offset price pressure and maintaining its current operating
cost structure.  Rating stability depends on EWOS maintaining
adjusted EBITDA cash interest coverage of more than 2x and
positive cash flow generation.


S&P could take a negative rating action if adjusted EBITDA
interest coverage drops to less than 2x, or if EWOS is unable to
generate positive free operating cash flow.  This would most
likely result from significant revenue erosion due to a decrease
in volumes of feed sold, or a significant working capital outflow
caused by a major disease outbreak either in Chile or Norway, and
a subsequent build-up of receivables.


In S&P's opinion, a positive rating action is unlikely over the
next 12-18 months, due to EWOS' high adjusted leverage.



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P O R T U G A L
===============



NOSTRUM MORTGAGES: S&P Raises Rating on Class A Notes From 'BB'
---------------------------------------------------------------
Standard & Poor's Ratings Services raised to 'BBB (sf)' from
'BB (sf)' its credit rating on Nostrum Mortgages 2003-1 PLC's
class A notes.  At the same time, S&P has affirmed its 'B (sf)'
and 'B- (sf)' ratings on the class B and C notes, respectively.


The rating actions follows S&P's credit and cash flow analysis of
the most recent transaction information available to S&P and the
application of its relevant criteria.


                           COUNTRY RISK


S&P's nonsovereign ratings criteria cap at 'A-' its ratings in
Portuguese residential mortgage-backed securities (RMBS)
transactions, which is five notches above its long-term sovereign
rating on Portugal.  Nostrum Mortgages 2003-1 is exposed to
country risk because of the 100% concentration of the securitized
assets in Portugal.


In S&P's opinion, the recession and rising unemployment associated
with increased country risk may affect obligors' ability to pay
the originator and servicer the amounts due under the mortgages.
To account for this increased country risk, following S&P's
revised assessment of Portuguese country risk on March 7, 2012, it
has incorporated a 30% adjustment to the portfolio's weighted-
average foreclosure frequency (WAFF) in S&P's analysis.


                         COUNTERPARTY RISK


On Sept. 5, 2012, S&P lowered its rating on the class A notes as
Caixa Geral de Depositos S.A. was not able to find a replacement
for its role as swap provider.


On Sept. 13, 2013, JP Morgan Securities PLC (A+/Stable/A-1)
replaced Caixa Geral de Depositos as the swap provider.  However,
as the swap documents do not comply with S&P's current
counterparty criteria, it can only give benefit to the swap in its
credit and cash flow analysis for ratings that are lower than its
long-term issuer credit rating (ICR) on JP Morgan
Securities--up to the 'A-' nonsovereign ratings criteria imposed
cap.  Before the novation of the swap provider, the previous swap
provider constrained S&P's rating on these notes at 'BB (sf)'.  As
the new swap provider has a long-term ICR of 'A+' (above the 'A-'
nonsovereign ratings criteria imposed cap), S&P's ratings in this
transaction are no longer constrained.


                   CREDIT AND CASH FLOW ANALYSIS


This transaction continues to outperform S&P's Portuguese RMBS
index.  However, arrears of more than 90 days have increased
slightly since S&P's last review in 2012.  Credit enhancement has
remained stable in 2013 because the notes have amortized pro rata.
The reserve fund is at its documented target and the transaction
has been able to generate excess spread to pay interest on the
class D notes.


To derive S&P's WAFF and weighted-average loss severity (WALS)
assumptions, it considered the transaction's performance and has
incorporated its view of increased country risk in S&P's credit
analysis.  Following the application of S&P's Portuguese RMBS
criteria, its credit coverage assumptions increased at each rating
level due to persistent house price declines that S&P has observed
since April 2011.


Considering the results of S&P's analysis and without the rating
being constrained by the long-term ICR on the swap provider, it
has raised to 'BBB (sf)' from 'BB (sf)' its rating on the class A
notes as S&P considers the available credit enhancement to be
commensurate with this rating level and its credit and cash flow
stresses.


S&P has affirmed its ratings on the class B and C notes because
these classes did not pass its cash flow stresses at higher rating
levels than those currently assigned.


Nostrum Mortgages 2003-1 is a Portuguese RMBS transaction that
closed in November 2003.  Banco Caixa Geral de Depositos S.A.
originated the underlying loans and is the servicer.


          STANDARD & POOR'S 17G-7 DISCLOSURE REPORT


SEC Rule 17g-7 requires an NRSRO, for any report accompanying a
credit rating relating to an property-backed security as defined
in the Rule, to include a description of the representations,
warranties and enforcement mechanisms available to investors and a
description of how they differ from the representations,
warranties and enforcement mechanisms in issuances of similar
securities.  The Rule applies to in-scope securities initially
rated (including preliminary ratings) on or after Sept. 26, 2011.


If applicable, the Standard & Poor's 17g-7 Disclosure Report
included in this credit rating report is available at:


            http://standardandpoorsdisclosure-17g7.com


RATINGS LIST


Class            Rating
           To                 From


Nostrum Mortgages 2003-1 PLC
EUR1.000 Billion Mortgage-Backed Floating-Rate Notes
(Nostrum Mortgages No. 1)


Rating Raised


A          BBB (sf)           BB (sf)


Ratings Affirmed


B          B (sf)
C          B- (sf)



=============================
S L O V A K   R E P U B L I C
=============================



SBERBANK SLOVENSKO: Fitch Affirms 'bb-' Viability Rating
--------------------------------------------------------
Fitch Ratings has affirmed Sberbank Slovensko a.s.'s (SBSK) Long-
term Issuer Default Rating (IDR) at 'BBB-' with a Stable Outlook.
The agency has also affirmed SBSK's Viability Rating (VR) at
'bb-'.


Key Rating Drivers: IDRS and support rating
SBSK's IDRs and Support Rating reflect the potential support the
bank can expect from its ultimate owner, Sberbank of Russia (SBRF;
BBB/Stable). Fitch believes the ultimate parent would have a high
propensity to provide support to SBSK, if needed, in light of the
strategic importance for SBRF of the broader central and eastern
European region. This view also takes into account SBSK's small
size relative to the parent's assets and capital base and
therefore the low cost of potential support. At end-H113, SBRF
controlled 99.39% of SBSK's shares via its 100%-owned Vienna-based
subsidiary Sberbank Europe AG (SBEU; BBB-/Stable).


Rating Sensitivities: IDRS and support rating
SBSK's Long-Term IDR would probably be downgraded or upgraded if
there was a change in SBRF's Long-term IDR. Any marked revision of
Fitch's view of SBRF's potential support to SBSK would also affect
SBSK's IDRs.


Key Rating Drivers: VR
The affirmation of SBSK's VR at 'bb-' takes into account the
bank's ongoing recapitalization and stronger reserve coverage of
impaired loans, as well as low refinancing risks as a result of
the limited use of non-deposit funding. At the same time, the VR
factors in SBSK's small size and modest market shares, currently
weak profitability and concentration risks in its loan book, in
particular as a result of financing of real estate projects (net
exposure equal to 0.8x Fitch core capital (FCC) at end-H113, down
from 2.3x at end-H112).


High loan loss provisions, mostly driven by a loan book review by
SBRF following the acquisition of SBSK, had a negative effect on
SBSK's performance results during 2012-H113, which were also hit
by the Slovakian bank levy. The bank budgets a return to
profitability in H213, driven by the planned drop in new
provisions as the portfolio clean-up has largely been completed,
as well as higher loan growth. Low interest rates, competition and
the relatively high cost base will remain constraints on
profitability.


NPLs (loans overdue by more than 90 days) were stable at around 7%
of gross loans at end-H113 and end-2012, albeit above the sector
average of 5.4%. In addition, restructured loans, which would have
been in default if it was not for prolongations, accounted for a
further 6.5% of loans at end-H113 (end-2012: 4.4%). NPL reserve
coverage was over 100%, although this ratio varies significantly
for different NPL categories, and overall coverage of NPLs and
restructured loans was a more moderate 62%, reflecting the bank's
significant reliance on collateral.


The FCC ratio improved to 10% at end-H113 from 7% end-H112, due to
a new equity injection and the conversion of preferred shares into
ordinary stock. A further planned EUR40 million Tier I capital
injection in Q413 and another EUR27 million Tier II injection in
2014 should have a short-term positive effect on the bank's
capital adequacy, creating flexibility to grow, notwithstanding
modest internal capital generation. The bank targets maintaining a
total regulatory capital ratio in excess of 11% (end-H113: 11.4%),
which Fitch views as no more than adequate.


Rating Sensitivities: VR
Upside potential for SBSK's VR is currently limited, but the
bank's credit profile would benefit from franchise diversification
and a reduction in portfolio concentrations, and stronger
profitability in a more favorable macroeconomic environment.
Should the bank suffer large losses as a result of further
deterioration in loan quality without this being offset by equity
injections, the VR could be downgraded.


The rating actions are as follows:


Long-term foreign currency IDR: affirmed at 'BBB-'; Outlook Stable
Short-term foreign currency IDR: affirmed at 'F3'
Support Rating: affirmed at '2'
Viability Rating: affirmed at 'bb-'



=====================
S W I T Z E R L A N D
=====================



SCHMOLZ + BICKENBACH: S&P Raises CCR to 'B'; Outlook Stable
-----------------------------------------------------------
Standard & Poor's Ratings Services said that it had raised its
long-term corporate credit rating on Switzerland-headquartered
specialty long steel producer Schmolz + Bickenbach AG (S+B) to 'B'
from 'B-'.  The outlook is stable.


At the same time, S&P raised its long-term issue rating on S+B's
outstanding senior secured notes to 'B' from 'B-'.  The recovery
rating remains at '4', indicating S&P's expectation of average
(30%-50%) recovery in the event of a payment default.


The upgrade reflects a higher capital increase than originally
anticipated of CHF439 million (about EUR357 million), which S&P
expects S+B to use almost entirely for debt reduction. S&P
therefore expects significant debt reduction, with adjusted debt
of roughly EUR1 billion anticipated at the end of 2013 versus
EUR1.3 billion at the end of 2012.  The upgrade also reflects
sequential recovery in S+B's profits in the first half of 2013,
from very weak earnings in the second half of 2012.  S&P also
considers the covenant breach risk to be alleviated and hence have
revised its liquidity assessment to "adequate" from "less than
adequate".


S&P revised its financial risk assessment to "aggressive" from
"highly leveraged" on its expectation of improving group leverage.


The stable outlook reflects S&P's expectation that S+B's leverage
will markedly improve in 2013-2014 following debt reductions and
stronger EBITDA generation.  S&P expects the company to reach an
adjusted debt-to-EBITDA ratio of about 5.0x-5.5x in 2013, further
declining to about or below 5.0x in 2014.  It also reflects S&P's
anticipation that S+B will maintain "adequate" liquidity by
extending its bank lines well in advance of their maturity in
2015.


Rating upside to 'B+' would depend on a sustainable improvement in
demand in Europe, mainly from automotive and mechanical
engineering end markets, and progress on S+B's restructuring
program, so that its adjusted debt to EBITDA improved to 4.5x or
below.  It would also require that S+B generate neutral to
positive free operating cash flow, contain its gross debt
increase, and improve its debt maturity profile.


S&P could lower the rating if the economic recovery in Europe
failed to materialize and adjusted debt to EBITDA exceeded 6.0x
without near-term recovery prospects.  Weakening liquidity, in
particular due to debt maturity concentration, could also result
in a lower rating.



=============
U K R A I N E
=============



FINTEST TRADING: Fitch Affirms LT Issuer Default Ratings at 'B'
---------------------------------------------------------------
Fitch Ratings has affirmed Ukrainian-based mining and metals
company Fintest Trading Co. Limited's Long-term foreign and local
currency Issuer Default Ratings (IDR) at 'B'. Fitch has also
downgraded Fintest's National Long-term Rating to 'A+(ukr)' from
'AA(ukr)'. The Outlook on the Long-term IDRs and National Long-
term Rating is Negative.


Fintest is a holding company of Donetsksteel Group. Fintest owns
production facilities in coking coal, coke and ferrous metallurgy
segments.


Key Rating Drivers


Ratings Constrained by Sovereign
Fintest's Long-term foreign currency IDR has been constrained by
Ukraine's sovereign ratings (B/Negative) since Fitch revised the
latter's Outlook to Negative from Stable in June 2013. Fitch
continues to view Fintest's standalone rating at 'B' with Stable
Outlook.


Sufficient Coking Coal Reserves of High Quality
The Pokrovskoye mine, owned by Fintest, is the second-largest
independent producer of coking coal in the Commonwealth of
Independent States (CIS) with an output of 8.4mmt in 2012 (21%
higher yoy). Its reserve base, exceeding 290m tons of coking coal,
provides a mine life of more than 50 years.


Fitch expects demand for the company's coking coal to be stable in
the medium-term, as the mine is located in close proximity to its
main customers, in a region with a coking coal shortfall; Ukraine
imports up to one third of its coking coal. The high quality of
the coking coal produced by Pokrovskoye provides an additional
comfort as it contributes to Fintest's negotiating power compared
with other producers of coking coal concentrate.


Vertically Integrated Business Model
Approximately 60% of coking coal concentrate is used by the
company internally for coke production. The company owns two
coking plants with eight coking batteries which produced 2.5mmt of
coke in 2012. High quality coal and technologically advanced
coking facilities allow production of premium quality coke.
Fintest is the largest player in the Ukrainian merchant coke
market with a 62% share in 2012, according to the company's data.


Low Value Added Products in Metallurgical Segment
In the ferrous metallurgical segment the company is focused on pig
iron (output of 1.3mmt in 2012, 17% higher yoy), which is at the
low value-end of the industry and typically exposed to high price
volatility.


New Furnace in Completion Phase
Launching a new electric arc furnace with an annual production
capacity of 0.75mmt, which is expected to be completed in November
2013, will allow Fintest to improve its product mix and the
utilization rate of its rolled metal production facilities.
However, the company's high exposure to semi-finished products
will remain.


Limited Diversification; High Country Risk
Rating constraints include its limited geographic diversification
with Fintest's operating assets located solely in Ukraine. In
Fitch's view exposure to this country entails higher-than-average
political, business and regulatory risks. The concentration of
coal mining in a single coal deposit base also exposes Fintest to
additional operational risks. The company uses two independent
mine shafts, which mitigate the risk of full termination of coal
mining operations due to technical accidents.


Improved Liquidity; Secured Borrowings
Fintest's liquidity for 2014 has improved with the signing of a
US$500 million loan agreement with a syndicate of banks with 3 to
5 year tranches. The loan will be used to refinance existing
borrowings. Given more than 90% of its borrowings are secured,
unsecured creditors face a material subordination risk.


Rating Sensitivities


Positive: Future developments that could lead to positive rating
actions include:


   -- Funds from operations (FFO)-adjusted gross leverage below
      2.5x on a sustained basis (2.2x at end-2012)


   -- EBITDAR margin sustainably above 20% (19.8% in 2012)


   -- Upgrade in Ukrainian Sovereign rating


Negative: Future developments that could lead to negative rating
action include:


   -- FFO adjusted gross leverage above 3.5x on a sustained basis


   -- Inability to roll over maturing debt and attract new
      financing to meet debt obligations


   -- Downgrade of Ukrainian Sovereign rating



===========================
U N I T E D   K I N G D O M
===========================



HASTINGS INSURANCE: S&P Assigns 'B-' Issuer Credit Rating
---------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B-' issuer credit
rating to Jersey-based intermediate holding company Hastings
Insurance Group (Finance) PLC (HIGF).  The outlook is stable.  At
the same time, S&P assigned a 'B-' issue rating to HIGF's planned
issuance of GBP415 million of senior secured fixed- and floating-
rate notes.


The final ratings are subject to the terms and conditions and
successful closing of the proposed issuance and depend on S&P's
receipt and satisfactory review of all final transaction
documentation.


HIGF plans to issue senior secured fixed-rate loan notes with a
seven-year tenor and senior secured floating-rate loan notes with
a six-year tenor.  The notes will rank senior to all existing and
future indebtedness subordinated to the notes.  HIGF will use the
net proceeds of the loan notes to repay a shareholder loan and to
distribute funds to existing shareholders of Hastings Insurance
Group Ltd.


The ratings on HIGF are at the same level as Hastings' group
credit profile (GCP).  The ratings reflect the group's extremely
weak financial risk profile and satisfactory business risk
profile.  S&P's assessment of the group's financial risk profile
is based on the group's weak capital adequacy and weak financial
flexibility, owing to its highly leveraged capital structure.  S&P
includes the GBP305 million of preference shares that will be
issued by the parent holding companies of HIGF as part of this
transaction as debt, as the shares are redeemable at the option of
the company.  The business risk profile is derived from industry
and country risk assessed as intermediate and an adequate
competitive position.  S&P combines these factors to derive a 'b'
anchor for the group.  S&P modifies the anchor down by one notch
to reflect its opinion of the group's weak management and
governance.


In accordance with S&P's criteria for rating holding companies of
an insurance group with a GCP of 'b-', the rating on HIGF is at
the same level as the group credit profile.  This reflects S&P's
view that the issuer has the capacity to meet its financial
obligations.  S&P has not applied the typical two-notch
differential between the operating and holding company (which
represents the holding company's structural subordination to the
operating companies) as it would result in a rating in the 'CCC'
category, implying the issuer was vulnerable to nonpayment, which
is not S&P's base-case assumption.


The Hastings group operates through two subsidiaries: Advantage
Insurance Co. Ltd. (AICL) and Hastings Insurance Services Ltd.
(HISL).  AICL underwrites U.K. personal motor business, while HISL
is the broking arm of the group. It places almost all of its
business with AICL.


All of Hastings' business stems from the large and mature U.K.
insurance market, where we consider industry and country risks to
be intermediate.  S&P considers that the U.K.'s non-life market
faces higher risks than similar major developed European markets
due to its low barriers to entry, relative commoditization of
major lines, and high degree of price competition.  Hastings is
particularly exposed to these industry risks as it sources almost
all of its new business from online price comparison Web sites.


S&P considers the group's competitive position to be adequate,
supported by its improving operating performance.  The group has
an extremely focused product strategy, with little diversity
outside of its U.K. personal motor book.  S&P considers the
broking operations to be a method of internalizing margin from the
insurance operation through premium financing and commission
income.  The broking business places 90% of its private car
insurance business with AICL, so both the underwriting and broking
arms are exposed to the fortunes of the U.K. motor market.
Therefore, S&P do not build in any diversification benefit for the
broking operations.


S&P considers this weakness is somewhat offset by the group's
operating performance, which has been improving since a management
buyout in 2009.  Return on revenue has increased to an impressive
24% in 2012, from 11% in 2011.  S&P believes this reflects
Hastings' competitive advantage in its pricing capabilities,
particularly in the price aggregator market.  In S&P's base-case
scenario, it expects that Hastings will expand its top line as
management looks to increase the group's market share.  S&P
expects that Hastings will expand both its broking revenue and
premium written by around 15% a year as part of this growth
effort.  Hastings plans to expand its distribution channels,
product offering, and target market.


"We assess the group's capital and earnings as weak, reflecting
the group's weak consolidated capital adequacy, as measured by our
risk based model.  On a consolidated basis, the group will have
minimal equity shareholders' funds in its capital base because of
the highly levered funding of the transaction to purchase Hastings
Insurance Group Ltd.  The transaction will also result in a
significant amount of goodwill, leading to a negative total
adjusted capital (TAC) figure," S&P said.


The Hastings Group is currently in deficit under the Gibraltar
regulator's (Financial Services Commission or FSC) group solvency
test.  However, S&P understands that the FSC sees this as a "soft"
regulatory requirement and that the regulator is currently
satisfied with the group's capital position.  The payback of an
GBP85 million shareholder loan as part of the loan notes issuance
should improve the regulatory position.  In S&P's base-case
scenario, it do not expect its assessment of the group's capital
adequacy to change over the next year due to its capital structure
and material intangibles.  S&P do anticipate that AICL will
maintain a regulatory solvency margin of 200% of its Solvency I
minimum requirement for the next year.


In recent years, AICL have reported loss ratios that have
outperformed the market, in S&P's opinion.  S&P anticipates that
AICL will continue to produce a strong underwriting result in
2013, reporting a combined ratio of 87%-89%.  Beyond 2013, S&P
expects that execution of the group's growth strategy will cause
Hastings' loss ratios to converge toward the market average.
Nevertheless, S&P expects earnings to be sufficient to maintain
current levels of regulatory capital adequacy at AICL.


"We assess the group's risk position as intermediate. AICL uses a
significant amount of reinsurance, limiting its exposure on any
one claim to GBP250,000.  It places its reinsurance programs with
high quality reinsurers rated at least 'A' and we anticipate that
these programs should reduce the level of underwriting volatility.
The group does have a more-aggressive investment policy than some
of its peers; it invested 18% of its portfolio in absolute return
funds.  However, we do not consider this to be outsized, relative
to its regulatory capital position," S&P noted.


S&P views the group's financial flexibility as weak due to the
significant amount of debt contained in its capital structure.
S&P anticipates that Hastings will have limited access to sources
of capital following the issue of senior debt to external
investors and preference shares to its private equity owners.
Following the capital restructuring, S&P expects financial
leverage to reach 100%, which in its view means the group will
have very little capacity for further funding from the debt
markets.  As part of the group's debt issuance, Hastings will have
available an undrawn GBP20 million revolving credit facility,
which S&P considers to be modest compared with the size of its
balance sheet.  The group's financial flexibility is also
constrained by its low fixed-charge coverage.  S&P expects this to
remain below 1.5x when including interest on the preference
shares, although it will likely exceed 1x.


Hastings' enterprise risk management (ERM) is neutral to the
rating.  S&P's assessment of ERM as adequate reflects its belief
that although management is capable of identifying, measuring, and
managing key risks, it could develop further its risk tolerance
guidelines, risk controls, and use of risk/reward analysis in its
decision making.


S&P views the group's management and governance as weak.  As a
result, S&P lowered its anchor of 'b' by one notch to 'b-'.  The
weak assessment recognizes the large amount of debt the group
plans to take on.  In S&P's opinion, this demonstrates an
aggressive risk tolerance that could harm the group's risk
profile.  S&P's weak assessment is also derived in part from its
belief that the group's current (and likely future) board has
significant representation from those with controlling ownership
in the group; their interests may therefore be placed above those
of other stakeholders.  The current board and executive management
team also includes a significant number of new appointments.
Hastings has appointed a chief executive officer, a chief
financial officer, and other senior positions within the past
year, giving them responsibility for executing an aggressive
growth strategy in the competitive U.K. motor market.  That said,
members of the senior management team that improved the group's
operating performance since the management buy-out remain in
place.


S&P regards the group's liquidity as strong.  Its liquidity ratio
is more than 130%, based on the strength of available sources,
mainly the group's regular inflow of premium income and highly
liquid asset portfolio in AICL.  S&P views the holding company's
cash flow liquidity as adequate, but highly sensitive to adverse
business or financial conditions.


The stable outlook reflects S&P's expectation that Hastings will
maintain earnings sufficient to meet its financial obligations.


S&P could lower the ratings if it considered HIGF was vulnerable
to nonpayment and reliant on favorable business and economic
conditions to meet its financial obligations.  This could result
from a fixed-charge cover ratio expected to be sustainably below
1x, owing to a weakening in earnings.  It could also materialize
from risks related to the group's growth strategy or adverse
developments in its core U.K. motor operating environment.


S&P considers it unlikely that it would raise the ratings on HIGF.
An improvement in the GCP, although not expected, is likely to
result in notching between the operating companies and HIGF
shifting to the two notches S&P more typically apply in Europe,
the Middle East, and Africa.  The most likely cause of a positive
rating action on HIGF would probably be a materially less
aggressive capital structure.



===============
X X X X X X X X
===============



* Market Volatility to Drag on Banks' Securities Revenue
--------------------------------------------------------
Banks' securities revenue is likely to be weaker in H213 due to
periods of increased volatility, particularly in fixed-income
markets, Fitch Ratings says. However, earnings from non-securities
businesses, including commercial banking, and wealth and asset
management, should support profits at the 12 global trading and
universal banks (GTUBs).


"We expect reduced inventory levels and strategic de-risking to
protect the GTUBs from material inventory losses if volatility
rises for prolonged periods. Nevertheless, there is likely to be
pressure on capital-market earnings from the uncertainty about the
timing and speed at which the Federal Reserve tapers its
quantitative easing program. Also, reduced investor confidence in
the US budgetary process and in the prospect of the debt ceiling
being raised in a timely manner could result in increased market
volatility, which would be likely to be negative for the GTUBs'
earnings," Fitch says.


"Securities revenue declined in Q213 as market dynamics
deteriorated at the end of the quarter with a rise in interest
rate expectations and credit spreads, and fixed-income market
conditions have remained challenging since then. Some banks will
be less affected by the pressure on fixed-income earnings,
depending on business mix. For example, we expect equity trading
revenue to be more resilient in H213, provided there are no major
shocks, so GTUBs with stronger equities franchises may suffer less
overall revenue erosion.


"We also think that banks with greater US exposure are likely to
generate higher operating profits than their mainly Europe-focused
peers as the economic outlook in the former is better, and the
size of the revenue pool bigger. US GTUBs have strengthened their
market shares in capital markets and advisory businesses and
continue to dominate league tables.


"Earnings for all GTUBs will continue to be affected by regulatory
initiatives, litigation and conduct costs in the coming quarters.
While some of these are one-off, others may introduce higher fixed
costs over time.


"Higher capital buffers will help offset these earnings pressures.
The GTUBs continued to increase their Basel III look-through
common equity Tier 1 ratios in H113. We believe they will now
concentrate on strengthening leverage ratios, to the expected 3%
Basel III minimum in Europe, and to 6% for banks and 5% for
holding companies if the proposed rules for US large banks take
effect. This should largely be achieved by right-sizing the
balance sheet through a combination of asset disposals and more
efficient netting of derivatives."



                            *********


Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par.  Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable.  Those sources may not,
however, be complete or accurate.  The Monday Bond Pricing table
is compiled on the Friday prior to publication.  Prices reported
are not intended to reflect actual trades.  Prices for actual
trades are probably different.  Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind.  It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.


Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than US$3 per
share in public markets.  At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled.  Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets.  A company may establish reserves on its balance sheet for
liabilities that may never materialize.  The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.


A list of Meetings, Conferences and Seminars appears in each
Thursday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged.  Send announcements to
conferences@bankrupt.com


Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals.  All titles are
available at your local bookstore or through Amazon.com.  Go to
http://www.bankrupt.com/booksto order any title today.



                            *********



S U B S C R I P T I O N   I N F O R M A T I O N


Troubled Company Reporter-Europe is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.
Valerie U. Pascual, Marites O. Claro, Rousel Elaine T. Fernandez,
Joy A. Agravante, Ivy B. Magdadaro, Frauline S. Abangan and Peter
A. Chapman, Editors.


Copyright 2013.  All rights reserved.  ISSN 1529-2754.


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