TEXT-Moody's revises outlook on Venezuela's rated banks

<a href=reuters.com>Reuters (The following statement was released by the ratings agency) MOODY'S CHANGES ITS OUTLOOK FOR ALL RATED BANKS IN VENEZUELA TO STABLE FROM DEVELOPING AS OIL PRODUCTION RETURNS TO NORMAL

New York, May 28, 2003 -- With Venezuelan oil production returned to more routine levels, Moody's Investors Service has changed its outlooks for all of its rated banks in the country to stable from developing. The action is a direct result of Moody's change in outlook to stable from developing on Venezuela's foreign currency ceilings that was announced on May 26.

The outlook change for the banks covers the E+ bank financial strength ratings (BFSR), and Caa1 foreign currency deposit ratings of Banco Mercantil S.A., BBVA Banco Provincial S.A., Banco de Venezuela Grupo Santander S.A., Banco del Caribe S.A., and Banco Banesco S.A.

Moody's says the stable outlook is based on the almost-complete return to the level of oil production that was experienced at PDVSA, the state-owned oil company, prior to the December strike by oil workers. Combined with the initiation of widespread capital controls, normalized oil production means that the central government is in a stronger political position than it enjoyed before the weeks of labor unrest.

The outlook reflects a combination of the still relatively low public-sector foreign currency debt ratios and the still relatively large international reserves. International reserves have increased following the imposition of capital controls.

The stable outlook for the Venezuelan banks' ratings incorporates the deep and potentially long-lasting damage to the country's main source of foreign currency earnings that has been suffered as a result of the ongoing restructuring of PDVSA, the foreign currency exchange controls, as well as an extremely weak operating environment.