S&P Global Ratings revised upwards the rating of 15 Italian banking institutions, following theItaly's sovereign rating upgrade from “BBB” to “BBB+” announced last April 11. The agency justified the decision with the strengthening of the country's external position, the financial solidity of families and businesses and a progressive, albeit gradual, improvement in fiscal imbalances.
Overall, S&P has seen a structural improvement in profitability, which is now significantly above the cost of capital for most institutions, thanks to more resilient business models and continuing to improve asset quality.
S&P raises outlook on Unicredit, Bpm, Intesa and 12 other banks: here's which ones
In detail, S&P has:
- Unicredit: raised the long-term credit rating from “BBB” to “BBB+” and revised the outlook to positive. The agency signals the possibility of a rating higher than the sovereign one, depending on the evolution of the corporate structure and the impacts related to possible extraordinary transactions, including those with Banco Bpm and Commerzbank.
- Understanding St. Paul: raised the rating to “BBB+” from “BBB”, confirming the stable outlook.
- Mediobanca, FinecoBank and Banca Mediolanum: improved long-term credit rating to “BBB+” from “BBB”, maintaining a stable outlook for all three.
- Bper Banking: raised the long-term and short-term ratings to “BBB/A-2” from “BBB-/A-3”, lowering the outlook to stable.
- Iccrea Banca: raised long-term and short-term ratings to “BBB/A-2” from “BBB-/A-3”, with outlook lowered to stable.
- Banco bpm: affirmed the ratings at “BBB/A-2” and the Recovery Credit Ratings (RCR) at “BBB+/A-2”, with an upgraded outlook to positive. The revision reflects the prospects of a possible integration with UniCredit and the related competitive strengthening versus peers with similar ratings.
- Institute for Sports and Cultural Credit and Mediocredito Centrale – Banca del Mezzogiorno: both upgraded to “BBB/A-2” from “BBB-/A-3” with outlook confirmed as stable.
- Banca Popolare di Sondrio: ratings confirmed at “BBB-/A-3” and RCR at “BBB/A-2”, with a positive outlook.
- De Volksbank (nu ASN) e Banco di Desio and Brianza: “BBB-/A-3” ratings confirmed with stable outlook.
- BNP Paribas (Italian branch) and Bank of New York Mellon (Italian branch): both RCR ratings raised from “A+/A-1” to “AA-/A-1+”, with outlook confirmed as stable.
S&P also recalled that, in line with its methodology, the ratings of Italian banks remain closely linked to that of the country. The agency tends not to assign ratings above sovereign creditworthiness to banks with prevalent exposure to the domestic market, regardless of their intrinsic solidity, due to the systemic risk in the event of a sovereign default.
Even though Italian banks are improving, the agency points out, high public debt and fiscal deficits continue to weigh on the government's ability to support the economy, especially in difficult times. However, the reduction in macroeconomic risks and external imbalances bodes well for the future of the banking system.
S&P also promotes FS
S&P also has Ferrovie dello Stato Italiane rating promoted from “BBB” to “BBB+” with a stable outlook, in line with the upgrade of Italy's sovereign rating. The short-term rating was affirmed at “A-2”. This upgrade reflects the improvement in the country's financial position and the application of the same assessment methodology adopted for banks.
