Moody’s Downgrades Thirteen Italian Banks

Moody’s downgraded by one to two notches the long-term debt and deposit ratings for ten, and the issuer ratings for three, Italian financial institutions.The action was triggered to some extent by an earlier downgrade of Italy’s sovereign paper. The news is yet another in a long line of downgrades of both sovereign financial debt in Europe’s weakest economies. It will stand has yet one more reason global capital markets investors have insisted on higher yields to put money into the markets.

Moody’s reported:

BANK-SPECIFIC RATING CONSIDERATIONS

UniCredit

The long-term deposit and debt ratings were downgraded to Baa2,  in line with the Italian sovereign rating, from A3. The C-  BFSR, mapping to a standalone credit assessment of baa2 was affirmed  at its current level, which is in line with the sovereign rating.  The outlook is negative on all ratings, in line with the sovereign,  and with other Italian banks. Moody’s notes that despite  UniCredit’s substantial international activities, its important  exposure to its domestic market means that its standalone rating is constrained  by the level of the sovereign rating, as is the case for other Italian  banks rated by Moody’s.

UniCredit Leasing

UniCredit Leasing’s long and short-term issuer ratings were  downgraded to Baa3/Prime-3 from Baa2/Prime-2. The  outlook remains negative and reflects that of the parent UniCredit (Baa2;  C-/baa2, negative).

According to Moody’s, the downgrade follows the downgrade  of the parent bank, which reduces the ratings uplift for the issuer  rating, despite Moody’s view of a very high probability of parental  support from UniCredit.

Intesa Sanpaolo

The long-term deposit and debt ratings were downgraded to Baa2,  in line with the Italian sovereign rating, from A3, thus eliminating  the notch of systemic support applied previously. The standalone  BFSR was affirmed at C-, however this now maps to a standalone  credit assessment of baa2 (previously baa1), also in line with the  sovereign rating. The outlook is negative on all ratings,  in line with the sovereign. Moody’s notes that Intesa’s  business is almost entirely domestic in nature, and as such its  standalone rating is constrained by the sovereign rating, resulting  in the lowering of the standalone credit assessment.

Banca CR Firenze (Carifirenze)

The long-term deposit and debt ratings were downgraded to Baa2  with negative outlook. This is in line with both the parent’s  (Intesa Sanpaolo) and the sovereign’s ratings. This rating  action eliminated the two notches of parental support from Intesa Sanpaolo,  previously incorporated into CR Firenze’s long-term deposit  and debt ratings, given the now lower long-term rating of  the parent, which forms the basis for assessing parental support.  The bank’s C- BFSR, mapping to a standalone credit  assessment of baa2, was not affected. The outlook is negative  on all ratings, in line with the sovereign, and with other  Italian banks.

Banca IMI

The long-term deposit and debt ratings were downgraded to Baa2  from A3. This is in line with both the parent’s (Intesa Sanpaolo)  and the Italian sovereign’s ratings. This rating action eliminated  the two notches of parental support from Intesa Sanpaolo, previously  incorporated into Banca IMI’s long-term deposit and debt  ratings, given the now lower long-term rating of the parent,  which forms the basis for assessing parental support. The bank’s  C- BFSR, mapping to a standalone credit assessment of baa2,  was not affected. The outlook is negative on all ratings,  in line with the sovereign, and with other Italian banks.

Banca Monte Parma

Banca Monte Parma’s long-term deposit rating was downgraded to  Baa2 from Baa1, directly following the downgrade of the ratings  of its parent Intesa Sanpaolo. This rating action reduces to one  from two notches the level of parental support from Intesa Sanpaolo,  given the now lower long-term rating of the parent, which  forms the basis for assessing parental support. The bank’s D+  BFSR, mapping to a standalone credit assessment of baa3, was  unaffected. The outlook on all ratings remains negative,  in line with the sovereign, and with other Italian banks.

Banca Nazionale del Lavoro

Banca Nazionale del Lavoro’s long-term Baa2 deposit rating  was affirmed. The other ratings and the negative outlook are unaffected.

The affirmation is based on Moody’s assessment of a very high probability  of parental support from BNP Paribas (A2; BFSR C-/BCA baa2,  stable) and a high probability of systemic support, which results  in two-notches of rating uplift from the ba1 standalone credit  assessment. The uplift has not changed and now stems from parental  support only — from one notch of parental support and one  notch of systemic support previously — following the downgrade  of Italy’s rating.

Cassa di Risparmio di Parma e Piacenza (Cariparma)

The long-term deposit and debt ratings were downgraded to Baa2,  in line with the Italian sovereign rating, from Baa1, thus  eliminating the current one notch of systemic support. The bank’s  C- BFSR, mapping to a standalone credit assessment of baa2,  was not affected. The outlook is negative on all ratings,  in line with the sovereign, and with other Italian banks.  Our high expectation of parental support from Credit Agricole(CASA) does  not actually result in any uplift for the banks’ ratings, given  that Cariparma’s standalone credit assessment of baa2 is in line with  CASA’s adjusted standalone credit assessment of baa2.

Banca Popolare Friuladria (Friuladria)

The long-term deposit and debt ratings were downgraded to Baa2,  in line with the Italian sovereign rating, from Baa1, so reducing  parental support from its parent, Cariparma, to one notch,  given the now lower long-term deposit rating of the parent,  which forms the basis for assessing parental support. The bank’s  D+ BFSR, mapping to a standalone credit assessment of baa3  was not affected. The outlook is negative on all ratings,  in line with the sovereign, and with other Italian banks.

Banca Carige

Banca Carige’s long and short-term deposit ratings were downgraded  to Baa3/Prime-3 from Baa2/Prime-2. The other ratings  and the negative outlook are unaffected.

The key driver for the one-notch downgrade of the deposit ratings  is the downgrade of Italy. At this Baa2 rating level of the government,  our assessment of a moderate probability of systemic support in the event  of a financial crisis results in no uplift from the baa3 standalone credit  assessment (from one notch of uplift previously), under our joint  default analysis (JDA) methodology.

Credito Emiliano

Credito Emiliano’s long and short-term deposit ratings were  downgraded to Baa3/Prime-3 from Baa2/Prime-2. The  other ratings and the negative outlook are unaffected.

The one-notch downgrade of the deposit ratings follows the downgrade  of Italy. At this rating level of the Italian government,  our assessment of a moderate probability of systemic support in the event  of a financial crisis provides no uplift from the baa3 standalone credit  assessment (from one notch of uplift previously), under our joint  default analysis (JDA) methodology.

GE Capital SpA

GE Capital Spa’s long-term deposit rating was downgraded  to Baa2 from Baa1. The outlook remains negative.

According to Moody’s, the downgrade reflects the downgrade  of Italy. GE Capital’s business is domestic and as such,  its rating is constrained by the sovereign rating, despite parental  support. In Moody’s view, parental support from General  Electric Capital Corporation (rated A1/P-1) continues to be very  high, but is likely to be linked to the longer-term prospects  for the business in Italy. As a result, we have lowered the  parental support uplift provided to the bank’s deposit rating to  three from four notches. This uplift is based on our expectation  of (i) a very high probability of parental support from General Electric  Capital Corporation ; and (ii) low probability of systemic support  for GE Capital Spa in the event of a financial crisis.

Cassa Depositi e Prestiti

The government-related issuer (GRI) Cassa Depositi e Prestiti’s  long-term issuer and debt ratings have been downgraded to Baa2,  with a negative outlook. This is at the same level as the Italian  government, given its 70% government ownership and the strong  financial and operational linkages with the government, reflected  in its public policy function. The outlook is negative in line  with the negative outlook on the sovereign.

Istituto Servizi Mercato Agricolo Alimentare (ISMEA)

The GRI ISMEA’s long-term issuer rating has been downgraded  to Baa2, with a negative outlook. This is at the same level  as the Italian government, given its full government ownership and  the strong financial and operational linkages with the government,  reflected in its public policy function. The outlook is negative  in line with the negative outlook on the sovereign.