Moody's has placed Unipol Banca under observation for a potential ratings upgrade following the decision of the Bologna-based group to set up an internal "bad bank" into which 3 billion non performing loans (Npl). The reorganization also envisages an increase in the coverage of non-performing loans and probable defaults.
Unipol's move could lead, according to the American rating agency, to a "sharp reduction of the bank's problem loans to around 10% of the total loan portfolio compared to 36% in 2016". La establishment of the bad bank – added Moody's in a note – “it will have a relatively limited impact on its capital, considering that most of the related losses will fall on other entities of the Unipol group”.
Moody's expects a strengthening of the creditworthiness of the "stand alone" bank, which however could be counterbalanced by the possible reduction of the support from Unipol, considering that the Bologna-based group has declared that it is looking for a strategic partner for the bank.
The American agency plans to conclude its rating review after Unipol provides the technical details on the provisions together with the half-yearly accounts. In particular, the long-term rating is under scrutiny “Baa2” and that referring to senior unsecured debt “Ba3”.
