Fitch Ratings-London-08 February 2010: Fitch Ratings has today affirmed Pirelli Real Estate Credit Servicing's (PRECS) Italian Residential and Commercial Special Servicer ratings at 'RSS2+' and 'CSS2+' respectively.

The ratings reflect PRECS's effective management and resolution of non-performing loan (NPL) portfolios. They are further supported by a sound internal control environment - enhanced over the last 12 months by the set-up of a new compliance function and the appointment of a new Head of Internal Audit. Additional benefit is gained from a robust IT platform, and continued investment in technology evidenced by recent upgrades to the data warehouse and subsequent enhancements to reporting capabilities.

PRECS continues to receive the support of its parent, Pirelli Real Estate (PRE), whilst on 30 June 2009, PRE agreed to sell 20% of PRECS to Calyon ('AA-'/'F1+'/Stable). A new governance structure was implemented, requiring at least one board member to be nominated by Calyon. Fitch believes the investment by Calyon provides a stable base upon which to further build the servicing operation.The ratings also take into account the challenges facing PRECS in reducing the number of external lawyers with which it has a relationship. At the end of 2008, PRECS utilised the services of 1,500 lawyers for loan work-outs, while this number had been actively managed down to 900 as at the end of 2009. PRECS expect to be issuing new work-outs to just 400 lawyers by the end of Q1 2010 - a reduction that Fitch believes will significantly enhance risk management at the servicer. Fitch also notes the average training hours per employee per year being lower than similarly rated peers. This is somewhat mitigated by an experienced middle management group and the high company tenure for operational staff.

As of 30 June 2009, PRECS managed 37,428 NPLs with a gross book value (GBV) of EUR8.65bn (2008: 97,283 loans; EUR11.1bn), with almost half of the secured assets located in the south of Italy and Islands (47% by value). The servicing portfolio consists of mostly commercial and residential assets while unsecured loans amount to approximately 46% of the total portfolio by GBV.

Fitch's global and Italian servicer rating criteria were used in the analysis of the servicer's operations and financial condition including a comparison of its operations against similar Italian servicers as part of the rating process.

The agency rates European residential and commercial mortgage loan primary and special servicers in the UK, Italy, Netherlands, Germany, Russia and Spain on a scale of 1 to 5, with 1 being the highest rating. Applicable criteria "Global Rating Criteria for Structured Finance Servicers" dated 30 September 2009, and "Rating Criteria for European Mortgage Loan Servicers - Italian Market Addendum" dated 1 November 2007, are available on www.fitchratings.com.

Contacts: Edward Register, London, Tel: +44 20 7682 7532; Robbie Sargent, +44 20 7682 7565.

Media Relations: Julian Dennison, London, Tel: +44 020 7682 7480, Email: julian.dennison@fitchratings.com.

Additional information is available on www.fitchratings.com.

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