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Banco Popular de Puerto Rico Upgraded

Following a reduction in subprime market exposure, ratings for the holding company that owns one of the largest Hispanic banks were upgraded today. Moody's "changed the rating outlook on Popular Inc. (BPOP) and its units to stable from negative. The company is rated A3 for senior debt and its unit, Banco Popular de Puerto Rico, is rated C+ for bank financial strength and A2 for deposits.The outlook change follows Popular's sale of a significant portion of its Equity One mortgage and consumer loan portfolio to American International Group Inc. The outlook was downgraded to negative Dec. 24, 2007.

Moody's said the transaction will reduce the company's exposure to U.S. subprime mortgages and significantly strengthen its holding company liquidity position since Popular has largely financed its U.S. consumer finance business with short- and medium-term wholesale borrowings at the parent company level."

Of course, we still have issues with AIG, Popular, and the rating agencies, but this change indicates that value may be returning to the minority banking sector faster than we had anticipated.
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