Standard & Poor’s rating agency just cut the ratings of 34 Italian banks.Among them was Unicredit SpA, Italy’s biggest bank, which was cut from A to BBB+ with a negative outlook.
The Dow looks like it has fallen about 50 points since that announcement, adding gravity to what’s shaping up to be the biggest stock market loss so far this year.
Standard & Poor’s said the ratings cut follows as a consequence of the Italian downgrade to BBB+ on January 13.
The European financial sector has appeared revitalized so far this year, after the European Central Bank announced liquidity support measures meant to increase confidence in struggling banks were announced in early December. Since then, Italian banks have purchased significant quantities of Italian sovereign bonds, strengthening the feedback loop between the domestic financial sector and the government.
Critics are mixed on the ramifications of that development, and it is not clear that this helped spur the downgrade today. It’s also worth noting that S&P’s separates solvency from liquidity when it makes its ratings decisions, disregarding the latter to focus on the former.
Here’s the full release from S&P:
LONDON (Standard & Poor’s) Feb. 10, 2012–Standard & Poor’s Ratings Services today said it has lowered its ratings on 34 Italy-based financial institutions. The downgrades follow the lowering of the unsolicited long- and short-term sovereign credit ratings on the Republic of Italy (BBB+/Negative/A-2; see “Italy’s Unsolicited Ratings Lowered To ‘BBB+/A-2’; Outlook Negative,” published Jan. 13, 2012, on RatingsDirect on the Global Credit Portal). They also reflect the revision of our Banking Industry Country Risk Assessment (BICRA) on Italy to group ‘4’ from group ‘3’, and of our economic risk and industry risk scores–both components of the BICRA–on Italy to ‘4’ from ‘3’ (see “BICRA On Italy Revised To Group ‘4’ From Group ‘3’ On Weakening Economic And Banking Industry Conditions,” published Feb. 10, 2012).
In addition, we have affirmed our ratings on two Italian financial institutions and removed them from CreditWatch with negative implications.
We have also kept the ratings on one Italian financial institution on CreditWatch with negative implications.
See the list below for the ratings on these financial institutions and their relevant subsidiaries. We will publish individual research updates on banks identified below, including a list of ratings on affiliated entities, as well as the ratings by debt type–senior, subordinated, junior subordinated, and preferred stock. The research updates will be available at www.standardandpoors.com/AI4FI and on RatingsDirect on the Global Credit Portal. Ratings on specific issues will be available on RatingsDirect on the Global Credit Portal and www.standardandpoors.com. RELATED CRITERIA AND RESEARCH
- Banks: Rating Methodology And Assumptions, Nov. 9, 2011
- Banking Industry Country Risk Assessment Methodology And Assumptions, Nov. 9, 2011
- Group Rating Methodology And Assumptions, Nov. 9, 2011
- Bank Hybrid Capital Methodology And Assumptions, Nov. 1, 2011
- Rating Government-Related Entities: Methodology And Assumptions, Dec. 9, 2010
- BICRA On Italy Revised To Group ‘4’ From Group ‘3’ On Weakening Economic And Banking Industry Conditions, Feb. 10, 2012
- Italy’s Unsolicited Ratings Lowered To ‘BBB+/A-2’; Outlook Negative, Jan. 13, 2012
RATINGS LIST The ratings listed below are issuer credit ratings unless otherwise stated. Downgraded To From UniCredit SpA UniCredit Leasing SpA BBB+/Negative/A-2 A/Watch Neg/A-1 Intesa Sanpaolo SpA Banca IMI SpA Banca Infrastrutture Innovazione e Sviluppo SpA (BIIS) BBB+/Negative/A-2 A/Watch Neg/A-1 Banca Nazionale del Lavoro SpA BBB+/Negative/A-2 A/Watch Neg/A-1 Cassa di Risparmio di Parma e Piacenza SpA BBB+/Negative/A-2 A/Watch Neg/A-1 Banca Monte dei Paschi di Siena SpA BBB/Negative/A-2 BBB+/Watch Neg/A-2 Banco Popolare Societa Cooperativa SCRL Credito Bergamasco Banca Aletti & C. SpA BBB-/Negative/A-3 BBB/Watch Neg/A-2 Unione di Banche Italiane Scpa BBB+/Negative/A-2 A-/Watch Neg/A-2 Mediobanca SpA BBB+/Negative/A-2 A/Watch Neg/A-1 Banca Popolare dell'Emilia Romagna S.C. BBB/Negative/A-2 BBB+/Watch Neg/A-2 Banca Popolare di Milano SCRL Banca Akros SpA BBB-/Negative/A-3 BBB/Watch Neg/A-2 Banca Carige SpA BBB-/Negative/A-3 BBB/Watch Neg/A-2 Banca Popolare di Vicenza ScpA BBB-/Negative/A-3 BBB/Watch Neg/A-2 Credito Emiliano SpA BBB/Negative/A-2 BBB+/Watch Neg/A-2 Veneto Banca SCPA BBB-/Negative/A-3 BBB/Watch Neg/A-2 Banca Popolare dell'Alto Adige BBB/Negative/A-2 BBB+/Watch Neg/A-2 Cassa di Risparmio della Provincia di Teramo SpA BB-/Negative/B BB+/Watch Neg/B Cassa di Risparmio di Cento SpA BB/Negative/B BB+/Watch Neg/B Unipol Banca SpA BB/Watch Neg/B BB+/Watch Neg/B Iccrea Holding SpA Iccrea Banca SpA Iccrea BancaImpresa SpA BBB/Negative/A-2 BBB+/Watch Neg/A-2 Banca Fideuram BBB+/Negative/A-2 A-/Watch Neg/A-2 Agos-Ducato SpA BBB/Negative/A-2 BBB+/Watch Neg/A-2 Dexia Crediop SpA BB-/Negative/B BB+/Watch Neg/B Banca Mediocredito del Friuli-Venezia Giulia SpA BBB/Negative/A-3 BBB+/Watch Neg/A-2 Istituto per il Credito Sportivo BBB+/Negative/A-2 A/Watch Neg/A-1 Eurofidi Scpa BBB-/Negative/A-3 BBB/Watch Neg/A-2 Ratings Affirmed; CreditWatch Action To From Banca di Credito Cooperativo di Conversano S.c.r.l BBB-/Negative/A-3 BBB-/Watch Neg/A-3 Istituto Centrale delle Banche Popolari Italiane SpA CartaSi SpA BBB-/Negative/A-3 BBB-/Watch Neg/A-3 CreditWatch Update To From FGA Capital SpA BBB/Watch Neg/A-3 BBB/Watch Neg/A-3 NB. This list does not include all ratings affected.
Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor’s public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column. Alternatively, call one of the following Standard & Poor’s numbers: Client Support Europe (44) 20-7176-7176; London Press Office (44) 20-7176-3605; Paris (33) 1-4420-6708; Frankfurt (49) 69-33-999-225; Stockholm (46) 8-440-5914; or Moscow 7 (495) 783-4009.