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Egan Jones Just Downgraded Italy's Most Troubled Banks To BB+

Tyler Durden's picture




 

Q. What is the last thing that panic driven market plunges need? A: The Truth, this time brough to you by the only credible rating agency: Egan-Jones.

 

  • Banca Monte dei Paschi: EJR lowered BBB to BB+ (S&P: A-) (BMPS IM)
  • Intesa Sanpaolo SpA: EJR lowered BBB- to BB+ (S&P: A+) (ISP IM)

 

On Intesa Sanpaolo:

Synopsis: Asset quality has improved but is still a problem. NPLs for the March quarter were 9.44% of total loans with reserve coverage of 51.9% (Year end December '10 NPLs were 9.36% of loans with 49.9% coverage). Capital is somewhat adequate with a capital/assets ratio of 8.6% of assets, however when unreserved NPLs are taken into account, equity is diluted to 5.82% of assets (December year end capital/assets was 8.31%, 5.47% with equity dilution). Greek sovereign exposure is stated at EUR 1.1B. We are downgrading to " BB+ " due to Italian sovereign concerns.

On Banca Monte dei Pasci, which is the oldest surviving bank in the world (h/t London Dude Trader)

Synopsis: Asset quality and capital are major concerns. Non-performing loans as of the March quarter were 5.44% of loans, up from 4.9% last year. Reserve coverage of 46% needs improvement. While POP holds " guarantees and mortgages " the value we believe is elusive and therefore applied only 30% of the guarantee to the reserves. Adding the additional EUR1.1B to reserves, coverage increases to 58% of NPLs. POP's 6.7% capital to assets ratio is diluted to 4.7% including the reserve shortfall. Real estate loans are relatively high at 50% of loans. POP has EUR14B in Spanish govt. bonds. We are downgrading to " BB+ " based on sovereign concerns.

We don't expect Banca Monte dei Pasci to be the longest surviving bank for much longer.

 

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Wed, 08/03/2011 - 11:24 | 1520769 Mr Lennon Hendrix
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Snake, meet tail.

Sorry, I meant:

Italy, eat gelato.

Wed, 08/03/2011 - 12:03 | 1520885 Cognitive Dissonance
Cognitive Dissonance's picture

Doode,

I can't keep up with your avatar changes. I don't see IDs, I see pictures when I scan ZH. Let my brain settle on one LH ID and one picture for a week (please?) before changing again. :>)

Wed, 08/03/2011 - 13:07 | 1521130 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Stay low, and keep moving.

;)

Wed, 08/03/2011 - 23:37 | 1522876 mason5566
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Wed, 08/03/2011 - 11:24 | 1520778 TruthInSunshine
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Porca miseria.

 

Bitchez.

Wed, 08/03/2011 - 12:33 | 1520986 Cast Iron Skillet
Cast Iron Skillet's picture

Madonna!

Wed, 08/03/2011 - 11:25 | 1520780 lilmac929
lilmac929's picture

Man...Tyler's busy today!  So much good news and so little time.

Wed, 08/03/2011 - 11:26 | 1520786 firstdivision
firstdivision's picture

So that explains the rally in the US markets.  It has nothing to do with the PPT and a certain Brian Sack...

Wed, 08/03/2011 - 11:27 | 1520790 Cognitive Dissonance
Cognitive Dissonance's picture

Better late than never.

Though they should have been downgraded all the way to SHIT. Maybe tomorrow.

Wed, 08/03/2011 - 11:42 | 1520842 Ghordius
Ghordius's picture

I expect they will be breaked down/back to national banks, soon. Those Austrian aquisitions are a serious problem...

Wed, 08/03/2011 - 11:34 | 1520814 jm
jm's picture

A real problem spot is that Banca Monte dei Pasci's funding is all short-term and their liquidity pool is drying up. 

Wed, 08/03/2011 - 11:39 | 1520825 bania
bania's picture

FORZA AZZURRI!!!

Wed, 08/03/2011 - 11:42 | 1520838 johngaltfla
johngaltfla's picture

I don't know about that comment Tyler...Dagong is looking more credible by the day.

Wed, 08/03/2011 - 11:49 | 1520858 Hedgetard55
Hedgetard55's picture

DOW 12,000 we hardley knew ye.

Break out the DOW 10k hats, bitchez.

Wed, 08/03/2011 - 11:59 | 1520883 Bolweevil
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Russia's next.

viva Rossi! viva la figa!

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