Moody's Investors Service is downgrading the credit ratings for 13 Italian banks three days after cutting the Italian government's bond rating.
The lower government rating means Moody's believes Italy is at greater risk of defaulting on its debts and "indicates a similarly increased risk that the government might be unable to provide financial support to its banks in financial distress," the Associated Press reports.
Moody's dropped seven banks by one notch; the other six, by two notches. They all remain investment grade.
Moody's lowered its long-term ratings on UniCredit, UCG.MI (-2.22%), Intesa SanpaoloISP.MI (-1.37%) and Banca IMI IT (+0.31%) by two notches to Baa2, in line with the Italian sovereign rating, the Wall Street Journal reports. The ratings on Banca Monte Parma, Cassa di Risparmio di Parma & Piacenza, Banca Popolare Friuladria and GE Capital SpA were lowered one notch to Baa2. The ratings on Banca CR Firenze, Cassa Depositi & Prestiti and Istituto Servizi Mercato Agricolo Alimentare also were downgraded to Baa2.
Banca Carige CRG.MI (-0.99%) and Credito Emiliano's CE.MI (-0.30%) ratings were lowered by one notch to Baa3. Banca Nazionale del Lavoro's Baa2 rating was affirmed. UniCredit unit UniCredit Leasing's ratings were downgraded one notch to Baa3.
The banks' outlooks are negative.
Moody's says fragile market confidence and financial problems in Greece and Spain have increased the risks Italy faces. Moody's also said it's worried about a diminished willingness among overseas investors to buy Italy's bonds. The new rating for government bonds, Baa2, is two notches above junk status.
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