Limassol, October 22, 2012 -- Moody's Investors Service has today downgraded the local-currency (LC) deposit ratings of BMCE Bank to Ba1/Non-Prime from Baa3/Prime-3 and lowered BMCE's standalone credit assessment to ba3, from ba2. All ratings carry a negative outlook.

Moody's downgrade reflects increased credit risk following the bank's expansion into Sub-Saharan Africa and the deterioration in the bank's asset quality and capital metrics. Concerns over BMCE Bank's funding and liquidity also contributed to the rating agency's assessment.

This action concludes Moody's review of the bank's ratings initiated on 25 May 2012.

A list of affected ratings is provided at the end of this press release.RATINGS RATIONALE

---STANDALONE RATINGS

The downgrade of BMCE Bank's standalone credit assessment to ba3 reflects (1) BMCE's asset-quality deterioration and Moody's expectations of further pressures stemming both from the bank's domestic operations and its foreign operations mainly in Sub-Sahara African countries; (2) BMCE Bank's relatively thin capital buffers, particularly in the context of the bank's expansion into higher-risk markets and (3) concerns over BMCE Bank's liquidity and funding profile.

1.)The first rating driver is the deterioration in BMCE's asset quality and Moody's expectations of further weakening stemming from both the bank's domestic lending exposures and its expansion in higher-risk Sub-Sahara African countries. BMCE's non-performing loan (NPL) ratio increased to 6.6% in 2011, from 4.9% in 2008, according to the bank's consolidated financial statements. African operations constituted 31% of group NPLs as of December 2011, with the NPL ratio for this lending segment increasing to 9.9% by year-end 2011 from 5.8% at year-end 2008.

Moody's expects further deterioration in asset quality given (1) the pressure from the economic slowdown in key euro area countries (mainly France and Spain, Morocco's main trade partners), which is suppressing economic growth within Morocco; and (2) the volatile operating environment in Sub-Saharan Africa, which accounts for 19% of group loans. Moody's believes that these loans will continue to be a prime driver of NPLs, given their higher risk profile.

2.)The second rating driver is BMCE's relatively thin capital buffers, particularly in the context of its expansion in higher-risk Sub-Sahara African markets. According to BMCE's consolidated financial statements, the Tier 1 ratio stood at 8.73% as of December 2011, while the shareholders' equity-to-total assets ratio declined to 7.5% as of June 2012 from 8.5% in December 2010. Although Moody's acknowledges BMCE's efforts to strengthen its capital buffers, including its announced MAD4 billion capital-strengthening plan (in equal amounts of equity and subordinated debt) for the 2012-15 period, the bank's capital buffers remain commensurate with a ba3 standalone credit assessment.

3.)The third rating driver is BMCE Bank's weakening funding and liquidity. BMCE is primarily deposit-funded; however, customer deposits dropped to 64% of assets as of June 2012 following a 3% decline in deposits over H1 2012, indicating that the bank's reliance on market funding has increased. As of June 2012, certificates of deposits accounted for around 6% of assets according to Moody's estimates, while bank borrowings increased to 14% of assets from 7% as of December 2010. In Moody's view, these market funding sources are less stable compared with customer, and in particular retail, deposits.

--- DEPOSIT RATINGS CONTINUE TO BENEFIT FROM SYSTEMIC SUPPORT

BMCE's supported ratings continue to receive two notches of systemic support, resulting in a local-currency deposit rating of Ba1. This reflects Moody's assumption of a high likelihood that the Moroccan authorities would support BMCE, given its systemic importance as the third-largest bank in Morocco with a 15% market share of total banking sector assets.

SUBORDINATE RATINGS

Moody's has also downgraded BMCE's subordinate debt rating to B1 from Ba1 to reflect Moody's view of the debt's loss-absorbing capacity as a Tier 2-qualifying capital instrument.

While the supervisory framework currently distinguishes between classes of subordinated debt in terms of loss -absorption capacity, outside a liquidation scenario, Moody's believes that the framework for bank resolution could develop further, in line with the policy initiatives undertaken in other banking systems, such as in Europe, where allowing for a burden-sharing of bank bailouts with bank creditors, especially of junior classes of bank securities, is being implemented.

As a result, BMCE's subordinated debt rating does not incorporate any uplift from systemic support and is positioned one notch below the bank's standalone credit assessment (for more detail, please refer to Moody's Special Comment entitled "Supported Bank Debt Ratings at Risk of Downgrade Due to New Approaches to Bank Resolution", published on 14 February 2011).

RATIONALE FOR THE NEGATIVE OUTLOOK

The negative outlook on BMCE's ratings reflects the elevated risks emanating from the bank's rapid expansion in Sub-Saharan Africa and the potential for further deterioration in the bank's financial metrics -- particularly asset quality-- given the higher risk of these operations.

WHAT COULD MOVE THE RATINGS UP/DOWN

While an upgrade is unlikely over the near term given the current negative outlook, Moody's says that upward pressure could emerge over a longer-term horizon following (1) a significant strengthening of its capital buffers and (2) improvements in the bank's operating environment.

Downward pressure might develop following (1) a deterioration in the bank's operating environments leading to an acceleration in NPL formation, which would erode its profitability; and/or (2) an intensification of liquidity pressures.

LIST OF AFFECTED RATINGS

- Local-currency deposit ratings were downgraded to Ba1/Not-Prime from Baa3/Prime-3

- The foreign-currency deposit ratings are unaffected at Ba2/Not-Prime

- Subordinated debt rating was downgraded to B1 from Ba1

- Standalone Bank Financial Strength Rating was downgraded to D- mapping to a baseline credit assessment of ba3 from D/ba2

- The outlook on all ratings is negative.

The principal methodology used in this rating was Moody's Consolidated Global Bank Rating Methodology published in June 2012. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

Headquartered in Casablanca, Morocco, BMCE Bank had total assets of MAD212.3 billion as of June 2012.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides relevant regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides relevant regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides relevant regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

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