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Moody's Downgrades 26 Italian Banks: Full Report

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Just because it is never boring after hours:

  • MOODY'S DOWNGRADES ITALIAN BANKS; OUTLOOKS REMAIN NEGATIVE

EURUSD sliding... even more. But that's ok: at some point tomorrow Europe will close and all shall be fixed, only to break shortly thereafter. And now.... Margin Stanley's $10 billion collateral-call inducing 3 notch downgrade is on deck.

Complete pre and post rating grid for italian banks:

Full report below:

Moody's downgrades Italian banks; outlooks remain negative
Global Credit Research - 14 May 2012
Actions conclude the review announcements of 15 February 2012 and other dates

Milan, May 14, 2012 -- Moody's Investors Service has today downgraded by one to four notches the long-term debt and deposit ratings for 26 Italian banks, including five banks that are part of larger groups. In almost all cases, the rating actions reflect concurrent downgrades of these banks' standalone credit assessments, rather than changes in Moody's assumptions about levels of third party support, including Government support.

The debt and deposit ratings declined by one notch for 10 banks, two notches for eight banks, three notches for six banks, and four notches for two banks. The short-term ratings for 21 banks have also been downgraded by one to two notches, triggered by the long-term rating downgrades. The rating outlooks for all affected entities are negative; a Moody's rating outlook is an opinion regarding the likely direction of an issuer's rating over the medium term.

Furthermore, Moody's changed the rating outlooks for the standalone BFSR of five Italian banks to negative from stable. The debt and deposit ratings for nine more Italian banks remain on review for further downgrade, for reasons specific to each bank.

A full list of affected ratings can be found at this link http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_142105

For additional information on bank ratings, please refer to the webpage containing Moody's related announcements: http://www.moodys.com/bankratings2012

The ratings for Italian banks are now amongst the lowest within advanced European countries, reflecting these banks' susceptibility to the adverse operating environments in Italy and Europe. Today's rating actions reflect, to differing degrees for each affected bank, the following key drivers:

1.) Increasingly adverse operating conditions, with Italy's economy back in recession and government austerity reducing near-term economic demand;

2.) Mounting asset-quality challenges and weakened net profits, as problem loans and loan-loss provisions are rising; and

3.) Restricted access to market funding which, if persistent, will exert added pressure on banks to reduce assets, posing risks to their franchises and earnings.

Furthermore, recent events highlight the risks for creditors from potential weaknesses in governance, controls and risk management, especially at some smaller, privately-held banks. In addition, today's actions reflect drivers specific to some banks, which are detailed at the end of this release.

Moody's notes that several mitigating issues have limited the magnitude of the downgrades. Specifically, Moody's cites the substantial liquidity support that the European Central Bank (ECB) has made available, significantly reducing near-term default risk. Furthermore, many banks have strengthened their capital levels and continue to generate sizeable pre-provision earnings under difficult conditions.

Nevertheless, given already elevated problem loan levels and weakened profitability, Italian banks are particularly vulnerable to adverse operating conditions, which are likely to cause further asset quality deterioration, earnings pressure, and restricted market funding access. These risks are exacerbated by investor concerns over the sustainability of the Italian government's debt burden, which has contributed to the difficult wholesale funding conditions faced by Italian banks.

RATING OUTLOOKS ARE NEGATIVE

The rating outlooks for all banks affected by today's actions are negative. The revised rating levels reflect currently foreseen risks and the ratings are expected to be resilient to a degree of further stress. However, Moody's considers that there are several factors that could cause further downward adjustments, such as (i) increasing funding stress; (ii) a prolonged recession; (iii) crystallisation of corporate governance, control and risk management weaknesses; or (iv) further weakening of the Italian government's creditworthiness. Moody's noted that the potential for further rating transition is heightened by the possibility of rapid increases in problem loans, as has been evident following supervisory inspections of certain Italian banks.

Moody's has published a special comment today titled "Key Drivers of Italian Bank Rating Actions," (http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_141195) which provides more detail on the rationales for these rating actions. For more information on bank ratings, please refer to the webpage containing Moody's related announcements: http://www.moodys.com/bankratings2012.

RATINGS RATIONALE -- STANDALONE CREDIT STRENGTH

As stated, today's rating actions primarily reflect Moody's view that the standalone credit strength of the affected banks has weakened. Based on their standalone creditworthiness, the banks downgraded today now fall into the following four broad groups:

- The first group comprises UniCredit (deposit rating A3; bank standalone bank financial strength rating (BFSR) C- / baseline credit assessment (BCA) baa2) and Intesa Sanpaolo (deposits A3; BFSR C- / BCA baa1), which together account for almost one third of the Italian market by assets. Their standalone credit assessments reflect solid, diversified franchises that generate sizeable pre-provision earnings.

- The second group (six banks) comprises other Italian banks with standalone profiles of baa3 or higher -- including the fifth-largest bank, Unione di Banche Italiane (deposits Baa2; BFSR D+ / BCA baa3). Banks in this group are better positioned than most domestic peers to cope with the current recession, helped by overall solid franchises and above-average earnings capacity.

- The third group (seven banks) consists of banks with ba1 standalone credit assessments. These institutions -- including the fourth-largest Banco Popolare (deposits Baa3; BFSR D+ / BCA ba1) -- face more significant challenges, often including a combination of weak capital levels under Moody's adverse scenarios, insufficient internal capital generation and funding constraints.

- The fourth group (11 banks) comprises banks with standalone credit assessments below ba1, including the third-largest Banca Monte Dei Paschi (deposits Baa3; BFSR D / BCA ba2). This bank faces more substantial challenges, often due to asset quality, capital and/or funding issues.

FIRST DRIVER -- INCREASINGLY ADVERSE OPERATING CONDITIONS

An important driver of today's action is the banks' deteriorating operating environment, as demonstrated by Italy's relapse into recession in early 2012, with no clear signs of recovery. This deterioration followed a brief and shallow recovery after the 2008-09 recession and many prior years of slow growth. Italy's GDP is still below the level it recorded in 2007. Moreover, Moody's notes that the Italian government's austerity measures and structural reforms are weighing on the country's near-term economic outlook. Moody's expects the weak economic environment to cause further growth in loan delinquencies, particularly for corporate and small business borrowers; as well as persistent high provisioning costs, restricted revenue growth and ongoing investor concerns.

SECOND DRIVER -- MOUNTING ASSET-QUALITY PROBLEMS AND WEAKENED PROFITABILITY

Most banks affected by today's rating actions already have elevated levels of problem loans, and their net earnings are weakened by substantial loan-loss provisioning expenses. Consequently, they are vulnerable to further asset-quality deterioration caused by the renewed recession and the ongoing euro area debt crisis, which has led to high inflows of problem loans in 2011. The resulting high provisioning costs may further erode net profitability and could weaken some banks' capital levels.

THIRD DRIVER -- RESTRICTED ACCESS TO MARKET FUNDING

The third driver underlying today's rating action is the increased uncertainty and risk resulting from the prolonged period of restricted market access for most Italian banks. These banks complement their core retail deposit and retail bond funding with less stable market funding, which funded approximately 36% of rated banks' total assets at year-end 2011. Indicating funding pressures, Italian banks' debt issuance fell sharply in second-half 2011. Though Moody's-tracked debt issuance of Italian banks (mostly long-term bonds) recovered in first-quarter 2012, at their recent pace new debt issuances would not fully cover the amounts maturing in 2012.

Due to the continuing euro area debt crisis, access to non-retail funding sources has become more costly and restricted and has led many of these banks to borrow significant amounts from the ECB. Gross ECB borrowings of Italian banks amounted to EUR271 billion at the end of April 2012, up sharply from EUR41 billion at the end of June 2011; the current level is amongst the highest in Europe. The availability of three-year funds from the ECB has mitigated near-term funding stress; however, the significant reliance on such funds raises the issue of whether these banks will be able to normalise their funding bases over the medium-term.

Moody's recognises that many Italian banks rely more on retail funding (including bonds issued to retail investors) than some European peers. However, balance sheet growth in recent years has increasingly been funded by market funds, resulting in loan-to-deposit ratios significantly above 100% even for traditionally retail-funded institutions. Structural reliance on market funds now poses a key challenge for many banks.

RATINGS RATIONALE -- LONG- AND SHORT-TERM DEBT & DEPOSIT RATINGS

In most cases, Moody's did not change its assumptions about the availability of support from a bank's parent, its cooperative group, regional or local government or the central government. The sovereign's own reduced credit strength -- reflected in the recent government bond rating downgrade to A3, with a negative outlook, from A2 -- did not cause any of today's downgrades following reduced capacity of support embedded in the sovereign rating (see press release http://www.moodys.com/research/Moodys-adjusts-ratings-of-9-European-sove..., 13 February 2012).

Our assessment of Italy's cooperative group (Banche di Credito Cooperativo) led to a reduction of the uplift due to cooperative support factored into the debt and deposit ratings for several members of this group.

OVERVIEW AND RATINGS RATIONALE -- SUBORDINATED DEBT AND HYBRID RATINGS

In addition, Moody's has today downgraded the subordinated and hybrid ratings for 17 Italian banks by one to five notches. For banks whose senior subordinated debt ratings had incorporated assumptions about government (or systemic) support, these assumptions have been removed. The removal of support from this debt class reflects Moody's view that in Italy, systemic support for subordinated debt may no longer be sufficiently predictable or reliable to be a sound basis for incorporating uplift into Moody's ratings. (For more detail, see 29 November 2011 announcement "Moody's reviews European banks' subordinated, junior and Tier 3 debt for downgrade, http://www.moodys.com/research/Moodys-reviews-European-banks-subordinate...)

In addition, Moody's now rates junior subordinated debt two notches (previously one notch) below a bank's adjusted baseline credit assessment (which reflects a bank's standalone strength, parent and cooperative group support, but not government support).

TODAY'S ACTIONS FOLLOW REVIEW ANNOUNCENTS ON 15 FEBRUARY 2012 AND OTHER DATES

Today's rating actions follow Moody's decision to review for downgrade the ratings for 114 European financial institutions, including Italian banks (see "Moody's reviews Ratings for European Banks", 15 February 2012 (http://www.moodys.com/research/Moodys-Reviews-Ratings-for-European-Banks...). Some banks downgraded today had been placed on review for downgrade on other dates (see Moody's reviews for downgrade Banca Monte dei Paschi di Siena's ratings, 2 February 2012 (http://www.moodys.com/research/Moodys-reviews-for-downgrade-Banca-Monte-...); Moody's reviews for downgrade UniCredit's A2/C- ratings (Italy), 16 November 2011 (http://www.moodys.com/research/Moodys-reviews-for-downgrade-UniCredits-A...); Moody's reviews Banca Popolare di Spoleto's ratings for downgrade (Italy), 27 October 2011 (http://www.moodys.com/research/Moodys-reviews-Banca-Popolare-di-Spoletos...); Moody's reviews Mediocredito Trentino-Alto Adige's D+ BFSR for downgrade, 3 April 2012 (http://www.moodys.com/research/Moodys-reviews-Mediocredito-Trentino-Alto...); Moody's reviews Cassa Centrale Banca, Cassa Centrale Raiffeisen and Banca Padovana for downgrade, 3 April 2012 (http://www.moodys.com/research/Moodys-reviews-Cassa-Centrale-Banca-Cassa...).

Separate from today's actions, Moody's has recently downgraded the ratings for Banca Tercas (see "Moody's downgrades Banca Tercas to B3/E+; ratings remain on review for downgrade", 7 May 2012; http://www.moodys.com/research/Moodys-downgrades-Banca-Tercas-to-B3E-rat...) and Banca Monastier (see "Moody's downgrades Banca Monastier e del Sile to B2/E+; ratings remain on review for downgrade", 8 May 2012; http://www.moodys.com/research/Moodys-downgrades-Banca-Monastier-e-del-S...)

WHAT COULD MOVE THE RATINGS UP/DOWN

Upgrades of the banks' ratings are unlikely in the near term, given the factors previously cited that have led to our continuing negative outlooks. However, a limited amount of upward rating pressure could develop if any bank substantially improves its credit profile and resilience to the prevailing conditions. This may occur through increased standalone strength, e.g. bolstered capital and liquidity buffers, work-out of asset quality challenges or improved earnings. Improved credit strength could also result from external support, e.g. via a change in ownership or the receipt of capital or liquidity injections.

Several factors could cause further downward rating changes, such as (i) increasing funding stress and reliance on central bank support, which would raise pressure on banks to deleverage, with adverse consequences for asset quality; (ii) a prolonged recession, which could similarly further exacerbate already adverse asset-quality trends and impair capital; or (iii) a weakening of the Italian government's credit strength.

RESEARCH REFERENCES

For further detail please refer to:

- List of Affected Issuers (http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_142105), 14 May 2012

- Special Comment: Key Drivers of Italian Bank Rating Actions, 14 May 2012

- Press Release: Moody's Reviews Ratings for European Banks, 15 Feb 2012

- Special Comment "How Sovereign Credit Quality May Affect Other Ratings", 13 Feb 2012.

- Special Comment: Euro Area Debt Crisis Weakens Bank Credit Profiles, 19 Jan 2012

- Special Comment: European Banks: How Moody's Analytic Approach Reflects Evolving Challenges, 19 Jan 2012

Moody's webpages with additional information:

- http://www.moodys.com/bankratings2012

- http://www.moodys.com/eusovereign

The methodologies used in these ratings were Bank Financial Strength Ratings: Global Methodology, published in February 2007, and Incorporation of Joint-Default Analysis into Moody's Bank Ratings: Global Methodology, published in March 2012. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

BANK-SPECIFIC RATING CONSIDERATIONS

UNICREDIT SPA

UniCredit's standalone credit assessment was lowered to baa2 from baa1, within the C- standalone bank financial strength rating (BFSR) category, which was confirmed at this level, whilst its long- and short-term deposit and debt ratings were downgraded to A3/Prime-2, respectively, from A2/Prime-1. The outlook on the C- standalone BFSR and on the A3 long-term deposit rating is negative.

Moody's says that the lowering of the standalone credit assessment to baa2 reflects (i) UniCredit's weakening profitability and asset quality; (ii) its restricted access to market funding; and (iii) the increasingly difficult operating environment that the group faces, particularly in the Italian market, where conditions have deteriorated significantly since H1 2011. The expectation that these rating drivers may persist for some time, and possibly intensify, underlies the negative outlook on the bank's standalone BFSR.

The rating agency notes that in this environment, the financial targets set out in the bank's November 2011 strategic plan, including a net profit of EUR3.8 billion by 2013, and EUR6.5 billion by 2015, are likely to have become more difficult to achieve. Pre-provision operating profit for 2011 declined by 9.4% to EUR9.7 billion. Gross impaired loans increased by 6.3% in 2011, with the increase relating mainly to exposures in Italy, and this trend has continued in Q1 2012. Although UniCredit has significant geographic diversification, Italy remains its single largest market, and conditions in the country will therefore significantly affect the group's performance. With Italy now in recession, there is potential for profitability and asset quality to weaken further during 2012.

Moody's notes that UniCredit has a relatively robust liquidity framework, including a substantial portfolio of ECB eligible assets, which are sufficient to cover wholesale maturities for a period significantly in excess of 12 months. However, the rating agency notes that UniCredit has significant reliance on confidence sensitive, more restricted, and costly funding sources, and there is a risk that the current more restricted and costly market access will continue for an extended period. Uncertainty regarding when UniCredit will again be able to fund itself regularly -- and on an economic basis -- is therefore a key credit and rating driver. The group's geographic diversification does however provide some benefits. UniCredit's operations in certain markets, such as Germany, improve its funding diversification and provide some mitigant to a more sensitive funding market in Italy.

Moody's notes that UniCredit's capital adequacy has been strengthened, through the successful completion of a EUR7.5 billion capital increase in January 2012, contributing to a Core Tier 1 ratio of 10.3% at March 2012. This has provided a more substantial buffer against potential losses, also in Moody's stressed scenario.

Moody's also acknowledges the group's strong franchises in several markets, including Italy, where the profitability of UniCredit's commercial banking business has improved in 2011 and into the first quarter of 2012. However, further improvements may prove more challenging given the recession in Italy.

Important elements that limited the lowering of BCA to one notch only are (i) the resilience of the group's profitability, stemming from its wide geographic and business-line diversification; and (ii) the strengthening of capital adequacy, after the recent capital raising.

UniCredit's A3 long-term deposit and debt rating is now at the same level as the Italian sovereign, and benefits from a very high expectation of systemic support, resulting in a two notch uplift from the BCA. The outlook on the A3 long-term deposit rating is negative, reflecting both the negative outlook on the Italian government bond rating, and the negative outlook on UniCredit's standalone BFSR.

INTESA SANPAOLO

Intesa Sanpaolo's standalone bank financial strength rating (BFSR) was downgraded to C- (mapping to a standalone credit assessment of baa1) from C+/a2. At the same time, Moody's downgraded Intesa's long- and short-term debt and deposit ratings to A3/Prime-2, respectively, from A2/Prime-1, directly following the downgrade of Intesa's standalone BFSR. The outlook on the C- standalone BFSR and on the the A3 long-term deposit rating is negative.

Moody's says that the downgrade of Intesa's BFSR to C-/baa1 from C+/a2 reflects the significant deterioration in the operating environment within Italy since the middle of 2011 and the negative effects this is having on Italian banks' profitability, asset quality and access to market funding. This is highly relevant for Intesa, given its high focus on domestic business.

The Italian economy is now in recession, and economic conditions are unlikely to significantly improve for some time. Intesa's asset quality continued to decline during 2011 and this is likely to deteriorate further in 2012. Moody's said that it believes that the weak performance of its asset quality combined with the fragile economic conditions may lead to weaker profitability during 2012.

Moody's notes that Intesa has a strong retail funding base and a substantial portfolio of ECB eligible assets, which are sufficient to cover wholesale maturities for a period significantly in excess of 12 months. However, the rating agency notes that there is a risk that restricted and costly market access will continue for an extended period. As a result, uncertainty regarding when Intesa will again be able to fund itself regularly -- and on an economic basis -- is a key credit risk and an important rating driver.

In terms of capital adequacy, Moody's notes that this was considerably strengthened by the EUR5 billion capital increase completed in 2011, with a Core Tier 1 ratio of 10.1% at 2011 year-end, providing the bank with an adequate resilience to both the rating agency's anticipated and stressed scenarios. Furthermore, and importantly, Moody's also acknowledges Intesa's leading and well diversified franchise in Italy, which supports the standalone credit assessment at its current level.

Moody's adds that the difficult prospects for profitability and asset quality -- and the uncertainties regarding market access -- are important drivers underlying the negative outlook for the C- standalone BFSR.

Intesa's A3 long-term deposit rating is now at the same level as, and constrained by, the Italian sovereign rating. The A3 long-term deposit rating benefits from a very high expectation of systemic support, providing one notch of rating uplift from the baa1 standalone credit assessment. The outlook on the A3 long-term deposit and debt ratings is negative, reflecting the negative outlook on the Italian government bond rating, and on Intesa's standalone BFSR.

BANCA IMI

Banca IMI's long- and short-term debt and deposit ratings were downgraded to A3/Prime-2, respectively, from A2/Prime-1, directly following the downgrade of the ratings of its parent Intesa Sanpaolo (Intesa). The outlook on the bank's C- standalone bank financial strength rating (BFSR), mapping to a standalone credit assessment of baa2, was changed to negative from stable.

Intesa Sanpaolo's standalone bank financial strength rating (BFSR) was downgraded to C- (mapping to a standalone credit assessment of baa1) from C+/a2, while its long- and short-term debt and deposit ratings were downgraded to A3/Prime-2, respectively, from A2/Prime-1.

The downgrade of Banca IMI's deposit ratings reflects the lower capability of Intesa to provide support, as evidenced by the downgrade of its own standalone BFSR and long-term deposit ratings. Banca IMI's A3 long-term deposit rating benefits from a very high expectation of parental support, providing two notches of rating uplift from its baa2 standalone credit assessment.

The outlook for Banca IMI's standalone BFSR was changed to negative from stable, reflecting the challenges for profitability and asset quality arising from the difficult operating environment within Italy. The outlook for the bank's A3 long-term deposit rating is negative, reflecting the negative outlook on its standalone BFSR, and also the negative outlook on the long-term deposit rating of its parent and support provider, Intesa.

BANCA CR FIRENZE

Banca CR Firenze's (Carifirenze) long- and short-term debt and deposit ratings were downgraded to A3/Prime-2, respectively, from A2/Prime-1, directly following the downgrade of the ratings of its parent Intesa Sanpaolo (Intesa). The outlook on the bank's C- standalone bank financial strength rating (BFSR), mapping to a standalone credit assessment of baa2, was changed to negative from stable.

Intesa Sanpaolo's standalone bank financial strength rating (BFSR) was downgraded to C- (mapping to a standalone credit assessment of baa1) from C+/a2, while its long- and short-term debt and deposit ratings were downgraded to A3/Prime-2, respectively, from A2/Prime-1.

The downgrade of Carifirenze's deposit ratings reflects the lower capability of Intesa to provide support, as evidenced by the downgrade of its own standalone BFSR and long-term deposit ratings. Carifirenze's A3 long-term deposit rating benefits from a very high expectation of parental support, providing two notches of rating uplift from its baa2 standalone credit assessment.

The outlook for Carifirenze's standalone BFSR was changed to negative from stable, reflecting the challenges for profitability and asset quality arising from the difficult operating environment within Italy. The outlook for the bank's A3 long-term deposit rating is negative, reflecting the negative outlook on its standalone BFSR, and also the negative outlook on the long-term deposit rating of its parent and support provider, Intesa.

BANCA MONTE PARMA

Banca Monte Parma's long-term deposit rating was downgraded to Baa1 from A3, directly following the downgrade of the ratings of its parent Intesa Sanpaolo (Intesa). The outlook on the bank's D+ standalone bank financial strength rating (BFSR), mapping to a standalone credit assessment of baa3, was changed to negative from stable.

Intesa's standalone bank financial strength rating (BFSR) was downgraded to C- (mapping to a standalone credit assessment of baa1) from C+/a2, while its long- and short-term debt and deposit ratings were downgraded to A3/Prime-2, respectively, from A2/Prime-1.

The downgrade of Banca Monte Parma's long-term deposit rating reflects the lower capability of Intesa to provide support, as evidenced by the downgrade of its own standalone BFSR and long-term deposit ratings. Banca Monte Parma's Baa1 long-term deposit rating benefits from a very high expectation of parental support, providing two notches of rating uplift from its baa3 standalone credit assessment.

The outlook for Banca Monte Parma's standalone BFSR was changed to negative from stable, reflecting the challenges for profitability and asset quality arising from the difficult operating environment within Italy. The outlook for the bank's Baa1 long-term deposit rating is negative, reflecting the negative outlook on its standalone BFSR, and also the negative outlook on the long-term deposit rating of its parent and support provider, Intesa.

BANCA MONTE DEI PASCHI DI SIENA

Moody's Investors Service has today downgraded Banca Monte dei Paschi di Siena's (MPS) standalone bank financial strength rating (BFSR) to D, mapping to a standalone credit assessment of ba2, from D+ / baa3, its long-term debt and deposit ratings to Baa3 from Baa1 and its short-term debt and deposit ratings to Prime-3 from Prime-2. The outlook on all ratings is negative.

Moody's says that the lowering of MPS' standalone credit assessment reflects pressures on financial fundamentals arising from the difficult operating environment in Italy and the impact of restricted and costly access to market funding. In particular, Moody's notes MPS' increased capital needs deriving from the European Banking Authority's (EBA) requirement that the bank cover its sovereign exposures by June 2012, as well as the challenges the bank has in meeting these capital requirements. MPS' asset quality has deteriorated significantly (to 12.1% Problem Loans/Gross Loans in 2011) and Moody's expects this trend to continue, whereas profitability is weak and likely to come under further pressure this year, exposing MPS' vulnerability to our stress scenario.

MPS' funding profile also shows some heightened reliance on wholesale market funds (the adjusted liquidity ratio stands at 11%), with a significant reliance on foreign investors. Due to the restricted market access, MPS' reliance on ECB funding has increased substantially, whereas Moody's liquidity-gap analysis over a 12 month horizon suggests a significant dependence on ECB funding. In combination, these factors have largely contributed to the two-notch lowering of MPS' standalone credit assessment to ba2.

The bank's national market share remains the key factor underpinning our standalone credit assessment at its current level.

The Baa3 long-term deposit rating benefits from our very high expectation of systemic support, providing two notches of uplift from the ba2 standalone credit assessment.

The outlook on all ratings is negative, reflecting the challenging operating environment and uncertainties on covering the bank's capital needs and future market access.

MPS CAPITAL SERVICES

Moody's Investors Service has today downgraded the standalone BFSR of MPS Capital Services (MPSCS) to D- (mapping to a standalone credit assessment of ba3) from D+/ ba1. At the same time, Moody's downgraded MPSCS's long-term deposit ratings to Baa3 from Baa2 and its short-term deposit ratings to Prime-3 from Prime-2. The outlook on the aforementioned ratings is negative, in line with the parent (Banca Monte dei Paschi di Siena).

According to Moody's, the two-notch downward adjustment of the standalone credit assessment to ba3 primarily reflects the bank's weak asset quality, which exposes the bank's vulnerability to our stress scenario.

Moody's also acknowledges the bank's integration with and ongoing funding from the parent, Banca Monte dei Paschi di Siena (MPS), underpinning the D-/ba3 standalone ratings

MPSCS's Baa3 long-term deposit rating benefits from three-notch uplift from our assessment of the very high probability of support from the parent Banca Monte dei Paschi di Siena SpA (MPS, rated Baa3; D/ba2) in the event of a crisis.

The outlook on all ratings is negative, in line with the parent.

BANCO POPOLARE SOCIETA' COOPERATIVA

Moody's Investors Service has today downgraded the long- and short-term deposit ratings of Banco Popolare (BP) to Baa3/Prime-3 (negative outlook) from Baa2/Prime-2. Concurrently, BP's standalone bank financial strength rating (BFSR) was confirmed at D+, but the standalone credit assessment was lowered to ba1 (formerly baa3).

Moody's says that key drivers of the one-notch lowering of the standalone credit assessment are pressures on capital, asset quality and internal capital generation stemming from the challenging operating environment and the impact of restricted and costly access to market funding. In particular, Moody's notes that BP has a low (7.3%) Core Tier 1 ratio and displays a capital shortfall in relation to the higher capital requirements (9%) mandated by the European Banking Authority (EBA) -- to which it must comply with by end-June 2012.

Moody's believes BP should be able to reach the 9% EBA target, as it largely depends on regulatory approval of the Advanced Internal Ratings Based (AIRB) model. Asset quality and internal capital generation are both modest and unlikely to improve in 2012. However, despite the lower capital levels than similar rated peers, BP is less sensitive, but still vulnerable, under Moody's stress scenarios. The bank's relatively high reliance on market funds (and a largely international investor base) caused a recent surge in ECB reliance, highlighting the bank's funding vulnerabilities and exposing it to a significant deleveraging or an ongoing reliance on ECB funding in the case that funding markets do not normalize soon, with both scenarios containing risks and potentially contributing to further negative ratings pressure.

BP's Baa3 long-term debt and deposit ratings benefit from a one-notch uplift from the bank's standalone credit assessment based on Moody's assessment of a high probability of systemic support.

The outlook is negative reflecting the challenging operating environment and uncertainty regarding future market access.

BANCA ITALEASE

Moody's Investors Service has today downgraded the long-term deposit ratings of Banca Italease (Italease) to Ba1 from Baa3 and its short-term deposit ratings to Not-Prime from Prime-3. The standalone bank financial strength rating (BFSR) -- which was not subject to the rating review -- remains at E+, mapping to a standalone credit assessment of b1.

Moody's says that the downgrade of Italease's Ba1 long-term deposit rating follows the one-notch downgrade of the parent Banco Popolare (rated Baa3; D+/ba1), reducing the parental support uplift from the standalone credit assessment to three notches (from four notches).

The outlook on all Italease's ratings is negative, in line with the parent, but also reflecting the bank's relatively high standalone rating positioning at E+/b1 for a company in run-off situation.

UNIONE DI BANCHE ITALIANE

Moody's Investors Service has today downgraded the standalone bank financial strength rating (BFSR) of Unione di Banche Italiane (UBI) to D+ with a negative outlook (mapping to a standalone credit assessment of baa3), from C- / baa1 and its long-term global local currency (GLC) deposit rating to Baa2 (negative outlook) from A3.

Moody's says that the downgrade of the standalone BFSR reflects pressures on capital and profitability from the difficult operating environment and the impact of restricted and costly access to market funding. Moody's acknowledges UBI's capital needs to comply with the more stringent standards of the European Banking Authority (EBA), and the current ratings incorporate the expectation that UBI will achieve compliance with the 9% EBA target. Profitability is low and has deteriorated more than some of its peers, and is likely to come under further pressure in 2012, exposing UBI's vulnerability under our stress scenario.

UBI's funding profile also shows some heightened reliance on wholesale market funds (the adjusted liquidity ratio stands at 8.4%), with a meaningful reliance on foreign investors. Due to the restricted market access, UBI's reliance on ECB funding has increased to a significant level.

In combination, these factors have largely contributed to the downgrade of UBI's standalone ratings to D+/baa3.

Moody's also notes the bank's strong market shares, which support the baa3 standalone credit assessment.

UBI's long-term global local currency (GLC) deposit rating is at the Baa2 level, based on Moody's assessment of a high probability of systemic support, which results in one-notch uplift from the baa3 standalone credit assessment.

The outlook on all ratings is negative, reflecting the challenging operating environment and uncertainties on future.

BANCA POPOLARE DI MILANO

Moody's Investors Service has today downgraded the subordinated and Tier III debt and MTN program ratings of Banca Popolare di Milano to Ba2 (from Ba1) and its junior subordinated MTN program rating to (P)Ba3 (from (P)Ba2). All other ratings and negative outlook are unaffected by this rating action.

Moody's says that the downgrade reflects the removal of the systemic support uplift (one notch in the bank's case) from subordinated and Tier III and notch widening for junior subordinated debt rating, in line with other Italian banks.

BANCA CARIGE

Moody's Investors Service has today downgraded the following ratings of Banca Carige (Carige): its standalone bank financial strength rating (BFSR) to D+ from C- (the standalone BFSR now maps to a standalone credit assessment of baa3, formerly baa2). At the same time, Carige's long-term deposit ratings were downgraded to Baa2 from Baa1. The aforementioned ratings now carry a negative outlook.

Moody's says that the key drivers for the one-notch downgrade of the standalone BFSR are pressure on capital from the challenging operating environment and the impact of restricted and costly access to market funding. Carige reported a very low 6.7% Core Tier 1 ratio, exposing the bank's vulnerability to our stress scenario; however, Moody's understands that a strengthening of this ratio is likely during 2012 through valorisation of goodwill. Carige's funding profile shows lower-than peers reliance on wholesale market funds (the adjusted liquidity ratio stands at 1.1%), with a moderate reliance on foreign investors. And even though Carige's reliance on ECB funding has increased due to the restricted market access, we believe this is more manageable than for many of its peers whose dependence has become much more significant.

In Moody's opinion, the rating is underpinned by the bank's 25-30% market shares in Carige's home region, contributing to adequate profitability, which is more resilient than peers.

In combination, these factors have limited the extent of the downgrade to one notch and a standalone rating at D+/baa3, higher than many of its peers.

The outlook on all ratings is nevertheless negative, reflecting the challenging operating environment and uncertainty regarding future market access which may continue to place pressure also on Banca Carige.

CREDITO EMILIANO

Moody's Investors Service has today downgraded the standalone bank financial strength rating (BFSR) of Credito Emiliano (Credem) to D+ (mapping to a standalone credit assessment of baa3), from C-/baa1). At the same time, its long-term deposit ratings were downgraded to Baa2 from A3. The outlook on all ratings is negative.

According to Moody's, the key drivers for the one-notch downgrade of the BFSR reflect pressure on capital from the difficult operating environment and the impact of restricted and costly access to market funding. Credem's Italian government bond portfolio is larger than average, which, together with the bank's exposure to small and medium-sized enterprises, renders Credem vulnerable under Moody's adverse scenario analysis, which factors in a mark-to-market stressed valuation loss on holdings of sovereign bonds.

Moody's notes that Credem's funding profile also shows some heightened reliance on wholesale market funds (the adjusted liquidity ratio stands at 4.8%), with a low reliance on foreign investors. Due to restricted market access, Credem's reliance on ECB funding has increased substantially whereas Moody's liquidity-gap analysis over a 12 month horizon suggests a significant dependence on ECB funding.

In combination, these factors have largely contributed to the downgrade of Credem's standalone BFSR.

In Moody's opinion, the rating is supported by Credem's satisfactory asset quality and profitability, which indicates a somewhat greater resilience of Credem against the pressures from the operating environment than its lower-rated peers.

Credem's Baa2 long-term deposit ratings benefit from a one-notch uplift from the bank's standalone credit assessment based on Moody's assessment of a moderate probability of systemic support.

The outlook on all ratings is negative, reflecting the challenging operating environment and uncertainty regarding future market access.

CREDITO VALTELLINESE

Moody's Investors Service has today downgraded Credito Valtellinese's (Creval) standalone bank financial strength rating (BFSR) to D+ (mapping to a standalone credit assessment of ba1) from C- / baa2, its long-term deposit ratings to Baa3 from Baa1 and its short-term deposit ratings to Prime-3 from Prime-2.

Moody's says that the key drivers of the BFSR downgrade were pressure on the bank's asset quality arising from the difficult operating environment and the impact of restricted and costly access to market funding. Moody's believes Creval has modest asset quality coupled with a low capital adequacy, even considering the conversion of a convertible bond in May 2012, which expose the bank's vulnerability under our stressed scenario. Creval's funding profile also shows some heightened reliance on wholesale market funds (the adjusted liquidity ratio stands at 10%), with a low reliance on foreign investors. Due to restricted market access, Creval's reliance on ECB funding has increased substantially.

In combination, these factors have largely contributed to the downgrade of Creval's standalone BFSR.

In Moody's opinion, the rating is supported by Creval's profitability, which is more resilient than that of peers, and largely due to lower goodwill impairment than larger banks.

Creval's Baa3 long-term deposit ratings benefit from a one-notch uplift from the bank's standalone credit assessment based on Moody's assessment of a moderate probability of systemic support.

The outlook is negative reflecting the challenging operating environment and uncertainty regarding future market access.

BANCA DELLE MARCHE

Banca delle Marche's standalone BFSR was downgraded to D (mapping to a ba2 standalone credit assessment) from C-, mapping to baa2. Its long and short-term deposit ratings were downgraded to Ba1/Non-Prime, respectively, from Baa1/Prime-1.

The lowering of the standalone credit strength reflects the challenges the bank faces -- caused by restricted and more expensive wholesale funding -- as well as the pressures on profitability and asset quality arising from the Italian banking system's difficult operating environment. Banca delle Marche's asset quality declined sharply during 2011, and there is potential for it to deteriorate further in 2012. As of year-end 2011, problem loans as percentage of gross loans stood at 12.2% (2011: 8.3%), which is significantly worse than average, and in the current conditions, there seems little prospect for improvement in profitability or asset quality in the next 12 months. The recent capital increase, completed in Q1 2012, increases the bank's Tier 1 ratio to about 8.3% (from 7.2% at year-end 2011) and provides an additional buffer for potential credit losses. Funding remains restricted and more costly. We note that Banca delle Marche's use of central bank funding is higher than its peers. However, this is partly mitigated by the bank's solid retail funding base -- which provides about 70% of the bank's total funding -- as well as a sufficient central bank eligible assets portfolio.

The Ba1 long-term deposit rating benefits from a moderate likelihood of systemic support, providing one notch of uplift from the ba2 standalone credit assessment.

The outlook for the bank's ratings is negative. The negative outlook on the standalone BFSR reflects the challenging operating environment and uncertainty regarding future market access. The negative outlook on the long-term deposit rating reflects the negative outlook on the standalone BFSR.

BANCA SELLA HOLDING

Moody's Investors Service has today downgraded Banca Sella's (Sella) standalone bank financial strength rating (BFSR) to D+ (mapping to a standalone credit assessment of ba1) from C- / baa2 and the bank's long- and short-term deposit ratings to Baa3/Prime-3 from Baa1/Prime-2. The outlook is negative.

Moody's says that the standalone BFSR's downgrade captures Sella's weak internal capital generation, low capital and modest asset quality, together exposing Sella's vulnerability under Moody's stress scenario.

However, Moody's notes the bank's above-average retail funding and revenue diversification. Sella's funding profile shows lower-than peers reliance on wholesale market funds (the adjusted liquidity ratio stands at negative 1.1%), with a low reliance on foreign investors. Due to restricted market access, Sella's reliance on ECB funding has however increased whereas Moody's liquidity-gap analysis over a 12 month horizon suggests a lower than peers dependence on ECB funding. Profitability, although modest, has deteriorated less than Italian peers.

In combination, these factors have largely contributed to the downgrade of Sella's standalone financial strength rating.

Sella's long term global local currency (GLC) deposit rating is Baa3, based on Moody's expectation of a moderate probability of systemic support, providing a one notch uplift.

The outlook is negative reflecting the challenging operating environment and uncertainty regarding future market access.

ICCREA BANCAIMPRESA

Moody's Investors Service has today downgraded Iccrea BancaImpresa's (Iccrea BI, formerly Banca Agrileasing) standalone bank financial strength rating (BFSR) to D (mapping to a standalone credit assessment of ba2) from D+/ba1, its long-term debt and deposit ratings to Ba1 from Baa2 and its short-term debt and deposit ratings to Not-Prime from Prime-2.

Moody's says that the key drivers for the downgrade of the BFSR were the bank's weak asset quality and low profitability, exposing the bank's sensitivity to Moody's stress scenario.

In Moody's opinion, the downgrade of the deposit rating is also a reflection of Moody's assessment of its support provider, the Italian co-operative credit banks (Banche di Credito Cooperativo or BCCs, unrated) given pressure from the challenging operating environment. This resulted in a one-notch reduction of the uplift from the ba2 standalone credit assessment, beyond what we had initially anticipated.

The outlook on all ratings is now negative, reflecting the difficult operating environment.

CASSA DI RISPARMIO DI BOLZANO

Cassa di Risparmio di Bolzano's standalone BFSR was downgraded to D+ (mapping to a standalone credit assessment of ba1) from C/ baa2. Its long and short-term deposit ratings were downgraded to Ba1/Non-Prime, respectively, from Baa2/Prime-2.

The lowering of the standalone credit assessment reflects the challenges the bank faces -- caused by restricted and more expensive wholesale funding, resulting in an increasing dependence on ECB funding or in significant deleveraging pressure if the bank was intending on reducing this funding -- as well as the pressures on profitability and asset quality arising from the Italian banking system's difficult operating environment. The bank is planning to increase its capital; this would provide an additional buffer against further credit losses, and enable the bank's capital to withstand our anticipated stress scenario. However, capital would remain vulnerable in our stress scenario.

The Ba1 long-term deposit rating benefits from a low likelihood of systemic support, providing no uplift from the ba1 standalone credit assessment.

The outlook for the bank's ratings is negative. The negative outlook on the standalone BFSR reflects the challenging operating environment and uncertainty regarding future market access. The negative outlook on the long-term deposit rating reflects the negative outlook on the standalone BFSR.

CASSA DI RISPARMIO DI FERRARA

Moody's Investor Service has today downgraded the junior subordinated debt rating of Cassa di Risparmio di Ferrara's to (P)B2 from (P)B1.

Moody's says that the downgrade reflects the widening of the notching to standalone credit assessment -- 2 notches, from standalone credit assessment -1 notch, in line with other Italian banks. This follows the removal of systemic support for subordinated debt, which is now notched one notch below the standalone rating of banks (but incorporating group or parental support).

The outlook on the junior subordinated rating remains negative, in line with the bank's standalone credit assessment of ba3.

BANCAPULIA

In May 2012, Moody's changed the outlook on BancApulia's ratings to negative. The negative outlook on the standalone BFSR reflects the challenging operating environment and uncertainty regarding future market access. The negative outlook on the long-term deposit rating reflects the negative outlook on the standalone BFSR.

BANCA POPOLARE DELL'ALTO ADIGE

Banca Popolare dell'Alto Adige's standalone BFSR was downgraded to D+ (mapping to a standalone credit assessment of ba1) from C-/ baa1. Consequently, its long and short-term deposit ratings were downgraded to Ba1/Non-Prime, respectively, from Baa1/Prime-2.

The downgrade of the standalone credit assessment reflects the bank's weak profitability, which will continue to be further challenged given the weak operating environment, and scarce availability of and high competition for cost-effective retail funding and weakening asset quality. The downgrade also reflects the wholesale funding reliance, resulting in increasing ECB funding and which we expect will increase further in the coming 12 months. Capital adequacy withstands our central scenario, but remains vulnerable in the stressed scenario.

The Ba1 long-term deposit rating benefits from a low likelihood of systemic support, providing no uplift from the ba1 standalone credit assessment.

The outlook for the bank's ratings is negative. The negative outlook on the standalone BFSR reflects the challenging operating environment and uncertainty regarding future market access. The negative outlook on the long-term deposit rating reflects the negative outlook on the standalone BFSR.

CASSA DI RISPARMIO DI CESENA

Cassa di Risparmio di Cesena's standalone BFSR was downgraded to D- (mapping to a standalone credit assessment of ba3) from D+ / baa3. Consequently, its long and short-term deposit ratings were downgraded to Ba3/Non-Prime, respectively, from Baa3/Prime-3.

The downgrade of the standalone BFSR beyond initial expectations reflects the bank's modest capital adequacy, as well as its weak and deteriorating asset quality arising from the Italian banking system's difficult operating environment, which exposes the bank's vulnerability to Moody's scenario analysis, resulting in significant lower capital levels in our anticipated and to capital shortfalls in our stress scenario. The new rating levels also take into considerationthe bank's reliance on market funds, resulting in an increasing dependence on ECB funding or in significant deleveraging pressure if the ECB was intent on reducing this funding.

The Ba3 long-term deposit rating benefits from a low likelihood of systemic support, providing no uplift from the ba3 standalone credit assessment.

The outlook for the bank's ratings is negative. The negative outlook on the standalone BFSR reflects the challenging operating environment and uncertainty regarding future market access. The negative outlook on the long-term deposit rating reflects the negative outlook on the standalone BFSR.

BANCA POPOLARE DI CIVIDALE

Banca Popolare di Cividale's standalone BFSR was downgraded to D (mapping to a standalone credit assessment of ba2) from C-/baa1. Its long and short-term deposit ratings were downgraded to Ba2/Non-Prime respectively from Baa1/Prime-2.

The downgrade of the standalone BFSR reflects the funding challenges the bank faces, with higher central bank funding use relative to peers -- caused by restricted and more expensive wholesale funding-- as well as pressure on its asset quality and profitability (also due to the higher cost of retail funding). The bank's use of central bank funding is above average and we expect this dependence to increase in the coming 12months. However, this is partially mitigated by a sizeable and increasing eligible assets portfolio.

The Ba2 long-term deposit rating benefits from a low likelihood of systemic support, providing no uplift from the ba2 standalone credit assessment.

The outlook for the bank's ratings is negative. The negative outlook on the standalone BFSR reflects the challenging operating environment and uncertainty regarding future market access. The negative outlook on the long-term deposit rating reflects the negative outlook on the standalone BFSR.

CASSA DI RISPARMIO DELLA PROVINCIA DI CHIETI

Cassa di Risparmio della Provincia di Chieti's standalone BFSR was downgraded to D- (mapping to a standalone credit assessment of ba3) from D+/ baa3. Its long and short-term deposit ratings were downgraded to Ba3/Non-Prime, respectively, from Baa3/Prime-3.

The downgrade of the standalone credit assessment below initial expectations was triggered by the bank's weak and deteriorating asset quality -- arising from the Italian banking system's difficult operating environment -- as well as weak core profitability and capital levels that could protect the bank against asset quality pressures. Capital levels are only just adequate under our central scenario, but remain vulnerable in the stress scenario.

The Ba3 long-term deposit rating benefits from a low likelihood of systemic support, providing no uplift from the ba3 standalone credit assessment.

The outlook for the bank's ratings is negative. The negative outlook on the standalone BFSR reflects the challenging operating environment and uncertainty regarding future market access. The negative outlook on the long-term deposit rating reflects the negative outlook on the standalone BFSR.

BANCA POPOLARE DI SPOLETO

Banca Popolare di Spoleto's standalone BFSR was downgraded to D (mapping to a standalone credit assessment of ba2) from C-/baa1. Its long and short-term deposit ratings were downgraded to Ba2/Non-Prime, respectively, from Baa1/Prime-2.

The lowering of the standalone credit assessment reflects the bank's weak and deteriorating asset quality -- caused by the challenging operating environment in the Italian banking system, the bank's very weak profitability, with a loss recorded in 2011, that will continue to weaken given scarcity of cost-effective retail funding, as well as its dependence on ECB funding and capital levels. Capital levels are declining, and while sufficient under our central scenario, are vulnerable in the stress scenario. Another significant bank-specific rating driver is our view that BPS's risk profile could increase as a result of the bank's growth strategy (announced in H1 2011 and recently confirmed), which targets expansion outside of its traditional territory, in Italy's major cities.

The combination of all these factors have lead to a four notch lowering off the standalone credit assessment.

The Ba2 long-term deposit rating benefits from a low likelihood of systemic support, providing no uplift from the ba2 standalone credit assessment.

The outlook for the bank's ratings is negative. The negative outlook on the standalone BFSR reflects the challenging operating environment and uncertainty regarding future market access. The negative outlook on the long-term deposit rating reflects the negative outlook on the standalone BFSR.

BANCA PADOVANA CREDITO COOPERATIVO

Moody's Investors Service has today downgraded the long-term deposit ratings of Banca Padovana to Ba2 from Ba1. Banca Padovana's standalone D- bank financial strength rating (BFSR) and its ba3 standalone credit assessment with a negative outlook were unaffected. All ratings now carry a negative outlook.

Moody's says that the downgrade of Banca Padovana's long-term rating reflects Moody's assessment of its support provider, the group of Italian banche di credito cooperativo (BCCs, unrated), given the pressure from the challenging operating environment. This resulted in a reduction of the uplift provided to the bank's long-term rating to one from two notches.

The outlook is negative, reflecting the significant challenges of turning around the bank in a difficult operating environment.

BANCA POPOLARE DI MAROSTICA

Banca Popolare di Marostica's standalone BFSR was downgraded to D (mapping to a standalone credit assessment of ba2) from C-, baa2. Its long and short-term deposit ratings were downgraded to Ba2/Non-Prime, respectively, from Baa2/Prime-2.

The downgrade of the standalone BFSR reflects the bank's weak and deteriorating asset quality -- arising from the Italian banking system's difficult operating environment -- low funding diversification, as well as the continued integration and de-risking challenges stemming from the bank's acquisition of Banca Treviso. Low funding diversification has resulted in a relatively low central bank eligible assets portfolio which makes the bank vulnerable in a liquidity stress scenario and in the medium term will weigh on profitability given the increase of retail funding costs. Capital adequacy is sufficient to withstand both our central and stress scenario analysis.

The Ba1 long-term deposit rating benefits from a low likelihood of systemic support, providing no uplift from the ba1 standalone credit assessment.

The outlook for the bank's ratings is negative. The negative outlook on the standalone BFSR reflects the challenging operating environment and uncertainty regarding future market access. The negative outlook on the long-term deposit rating reflects the negative outlook on the standalone BFSR.

BANCA DELLA MARCA CREDITO COOPERATIVO

Moody's Investors Service has today downgraded Banca della Marca Credito Cooperativo's (Banca Marca) standalone bank financial strength rating (BFSR) to D+ (mapping to a standalone credit assessment of ba1) from C-/baa1, its long-term deposit ratings to Baa3 from A3 and its short-term deposit ratings to Prime-3 from Prime-2.

Moody's says that the key reasons for the downgrade of the BFSR were (i) the bank's asset-side vulnerability, stemming from its small size and loan concentration and pressure on the bank's profitability, which, although modest, deteriorated less than peers. These factors expose the bank's sensitivity to Moody's stress scenario; and (ii) the impact of restricted and costly access to market funding.

In combination, the above factors have largely contributed to the downgrade of the bank's standalone BFSR.

Moody's also acknowledges the bank's above-average retail funding and capital. Banca Marca's funding profile shows lower-than peers reliance on wholesale market funds (the adjusted liquidity ratio stands effectively at zero), with a very low reliance on foreign investors. Due to the restricted market access, Banca Marca's reliance on ECB funding has however increased whereas Moody's liquidity-gap analysis over a 12 month horizon suggests a lower than peers dependence on ECB funding.

The Baa3 long-term deposit rating benefits from Moody's expectation of moderate support from the Italian co-operative credit banks (Banche di Credito Cooperativo or BCCs, unrated), providing one notch of uplift from the ba1 standalone credit assessment.

The outlook on all ratings is negative, reflecting the challenging operating environment and uncertainty regarding future market access.

MEDIOCREDITO TRENTINO-ALTO ADIGE

In May 2012, Moody's lowered the standalone credit assessment of Mediocredito Trentino Alto Adige to ba1 from baa3, within the standalone D+ BFSR category. The bank's long and short-term deposit ratings were downgraded to Baa1/Prime 2, respectively, from A2/Prime-1.

The lowering of the standalone credit assessment reflects the challenges caused by restricted and more expensive wholesale funding access, as well as challenges that this presents to MTAA's business model. The liquidity-gap analysis over a 12-month period reveals a significant dependence on central bank and shareholder funding.

The downgrade of the long-term deposit ratings reflects:

(i) The lower ba1 standalone credit assessment.

(ii) The downgrade on 15 February 2012 of the Autonomous Province of Trento and Autonomous Province of Bolzano to A1 (outlook negative) from Aa3. The Autonomous Province of Trento and Autonomous Province of Bolzano -- together with the Autonomous Region of Trentino Alto Adige -- own a controlling 52.5% stake in MTAA. MTAA's ratings, which benefit from uplift from regional government support from these entities, are sensitive to any change in their ratings, and subsequently their ability to provide support to MTAA, if required.

(iii) A reassessment of the local-government support assumptions that Moody's currently incorporates into MTAA's deposit ratings, to reflect the evolving support environment across Europe.

The outlook for these ratings is negative. The negative outlook on the standalone BFSR reflects the challenging operating environment and uncertainty regarding future market access. The negative outlook on the long-term ratings reflects the negative outlook on the standalone BFSR, as well as the negative outlook on the two support providers, the Autonomous Province of Trento and Autonomous Province of Bolzano.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides relevant regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides relevant regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides relevant regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

The ratings have been disclosed to the rated entities or their designated agents and issued with no amendment resulting from that disclosure

Information sources used to prepare the ratings are the following: parties involved in the ratings, parties not involved in the ratings, public information, and confidential and proprietary Moody's Investors Service information.

Moody's adopts all necessary measures so that the information it uses in assigning the ratings is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Moody's considers the quality of information available on the rated entities, obligations or credits satisfactory for the purposes maintaining these ratings

Moody's Investors Service may have provided Ancillary or Other Permissible Service(s) to the rated entities or their related third parties within the two years preceding the credit rating action. Please see the special report "Ancillary or other permissible services provided to entities rated by MIS's EU credit rating agencies" on the ratings disclosure page on our website www.moodys.com for further information.

The below contact information is provided for information purposes only. Please see the issuer page on www.moodys.com for Moody's regulatory disclosure of the name of the lead analyst and the office that has issued the credit rating

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Please see the ratings disclosure page on www.moodys.com for information on (A) MCO's major shareholders (above 5%) and for (B) further information regarding certain affiliations that may exist between directors of MCO and rated entities as well as (C) the names of entities that hold ratings from MIS that have also publicly reported to the SEC an ownership interest in MCO of more than 5%. A member of the board of directors of this rated entity may also be a member of the board of directors of a shareholder of Moody's Corporation; however, Moody's has not independently verified this matter.

Please see Moody's Rating Symbols and Definitions on the Rating Process page on www.moodys.com for further information on the meaning of each rating category and the definition of default and recovery.

Please see ratings tab on the issuer/entity page on www.moodys.com for the last rating action and the rating history.

The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Johannes Felix Wassenberg
MD - Banking
Financial Institutions Group
Moody's Investors Service Ltd.
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Financial Institutions Group
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Mon, 05/14/2012 - 16:41 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Move along....

Mon, 05/14/2012 - 16:43 | Link to Comment AlaricBalth
AlaricBalth's picture

A little late!

Mon, 05/14/2012 - 16:48 | Link to Comment The trend is yo...
The trend is your friend's picture

Eagan jones doresn't even bother with italy, more focused on US, Germany, and France

Mon, 05/14/2012 - 16:51 | Link to Comment Manthong
Manthong's picture

Nowadays, with unlimited, unrestrained ECB money it’s like getting this on your paycheck:

http://i46.tinypic.com/2hr1jll.jpg

Mon, 05/14/2012 - 17:00 | Link to Comment CClarity
CClarity's picture

Bank runs now spreading.   This is going to accelerate across the Mediteranean abutting European countries, quickly creeping into the Balkans, then they'll just fan out.  Seems someone is just sloshing the gasoline on the flames now.  Fixed income knew this morning.

Mon, 05/14/2012 - 22:00 | Link to Comment Buck Johnson
Buck Johnson's picture

It sure will, and it won't get any better for the US.  Because many of those european banks and central banks are counterparties to our derivatives also.  So they will demand the tens or hundreds of billions from our banks and they won't have it.

Mon, 05/14/2012 - 16:42 | Link to Comment maxmad
maxmad's picture

collapse Bichez!

Mon, 05/14/2012 - 17:17 | Link to Comment tocointhephrase
tocointhephrase's picture

'd' now giv me an 'E'

Morning Asia!

Mon, 05/14/2012 - 16:44 | Link to Comment ihedgemyhedges
ihedgemyhedges's picture

I have a sudden craving for veal parmigiana..........

Mon, 05/14/2012 - 16:46 | Link to Comment trampstamp
trampstamp's picture

drop this cow already!

Mon, 05/14/2012 - 17:12 | Link to Comment Banksters
Banksters's picture

Ban MATH!    

Mon, 05/14/2012 - 17:35 | Link to Comment NotApplicable
NotApplicable's picture

Insufficient at this point in time. Even with no math there's still these things called prices. Worse yet, people focus on their "handles" as a rough unit of measure. So, we're gonna have to step up the game and...

Ban NUMBERS!

Mon, 05/14/2012 - 16:41 | Link to Comment Conman
Conman's picture

Its ok, Groupon will save the NasdAplPon tomorrow..

Mon, 05/14/2012 - 19:10 | Link to Comment Gypsyducks
Gypsyducks's picture

LNKD up a cool 3.05% today. With a PE just shy of 685 consider it a Strong Buy.

Mon, 05/14/2012 - 20:58 | Link to Comment WonderDawg
WonderDawg's picture

I made on nice chunk on LNKD puts early last week, just looking for the right opportunity to short that turd again. Hoping to duplicate with CRM this week. Earnings on Thursday.

Mon, 05/14/2012 - 16:42 | Link to Comment junkyardjack
junkyardjack's picture

Bullish.  The Italian Mafia will have the banks upgraded by the end of the week

Mon, 05/14/2012 - 16:43 | Link to Comment resurger
resurger's picture

Must Hold!

Mon, 05/14/2012 - 17:21 | Link to Comment EscapeKey
EscapeKey's picture

All priced in already. The market *knew* exactly which 26 banks they were, and how much they'd be downgraded.

Actually, come to think of it, if the market knows all of this, surely it must be guilty of insider trading?

Not that that is a crime these days if you're an insider, of course...

Mon, 05/14/2012 - 17:37 | Link to Comment NotApplicable
NotApplicable's picture

In Soviet America, only outsiders are convicted of insider trading.

Mon, 05/14/2012 - 18:07 | Link to Comment BurningFuld
BurningFuld's picture

JP Morgan had a bad quarter and the Wall Street Boys are on a freekin, rampage....look out Europe.

Mon, 05/14/2012 - 16:43 | Link to Comment SourNStout
SourNStout's picture

Greece ---- Bank Run is coming

Italy ---- Confirmed --- they are next for a bank run

 

Audit --- Expose --- End it

Mon, 05/14/2012 - 16:48 | Link to Comment youngman
youngman's picture

I can´t believe it hasn't happened already.....bank runs that is....but hey...gold is down....

Mon, 05/14/2012 - 16:56 | Link to Comment SourNStout
SourNStout's picture

Ditto!

Sheeple won't understand until its too late. Eitherway, there is no money in the bank vaults.

Its simply 0s & 1s on a server controlled by the NWO

Mon, 05/14/2012 - 17:00 | Link to Comment ihedgemyhedges
ihedgemyhedges's picture

If you look closely, there are just 0s.........................

Mon, 05/14/2012 - 17:38 | Link to Comment NotApplicable
NotApplicable's picture

And that's only because null is out in protest.

Mon, 05/14/2012 - 16:46 | Link to Comment Sudden Debt
Sudden Debt's picture

THE SOLUTION TO ALL GREEK, ITALIAN, SPANISH AND PORTUGESE PROBLEMS!!!!

Must see!!

http://www.youtube.com/watch?v=xOrgOW9LnT4&sns=em

NOW WHAT ARE YOU GOING TO DO APERICA?!?!?!?!

Mon, 05/14/2012 - 16:57 | Link to Comment Rainman
Rainman's picture

We will raise you one Kalifornia....the world's 9th largest economy nobody likes to talk about.

Jerry Moonbeam misses his January deficit projection by 70%...cuts employees to a 4-day work week.

 http://www.bloomberg.com/news/2012-05-14/brown-calls-for-8-3-billion-cuts-to-fill-15-7-billion-deficit.html#

 

Mon, 05/14/2012 - 17:16 | Link to Comment LetThemEatRand
LetThemEatRand's picture

If JPM lost as much money as California, then 9 people would be fired [or resign rather]!!!

I guess it's now official that a single bank has far more money to lose than the 9th largest economy in the world.  Pretty pathetic.  Tighten your belts American, Jamie needs a new pair of shoes.

Mon, 05/14/2012 - 17:35 | Link to Comment RoadKill
RoadKill's picture

But I thought the solution to our problems was more government regulation of the banks.

JPM share of US bank deposits is far higher then Cali's share of US GDP yet Cali suffers an unexpected loss 7 times higher then JPM and we stilll think socialitic regulation is better then free markets.

Mon, 05/14/2012 - 20:59 | Link to Comment WonderDawg
WonderDawg's picture

Regulation is toothless when the regulators are bought. But I agree, if the bastards were allowed to fail when they fuck up, the need for regulation would be minimal.

Mon, 05/14/2012 - 17:37 | Link to Comment NotApplicable
NotApplicable's picture

Four days? So... overtime then?

Mon, 05/14/2012 - 17:05 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

I think I finally understand why you flail your arms like you do.  I think I'll try it, too.

Move along!!!!

[flail, flail]

Mon, 05/14/2012 - 17:16 | Link to Comment cameldojo
cameldojo's picture

THE SOLUTION TO ALL GREEK, ITALIAN, SPANISH AND PORTUGESE PROBLEMS!!!!=Don't drop your banana?

Mon, 05/14/2012 - 17:46 | Link to Comment killallthefiat
killallthefiat's picture

Go find some food under a rock?!

 

Nice vid tho. Tx

Mon, 05/14/2012 - 16:45 | Link to Comment LawsofPhysics
LawsofPhysics's picture

LOL!!!!   Downgrade them all!  They will pretend to make loans and we will pretend to pay them back!  LMFAO!

Eventually someone lights a match. 

Mon, 05/14/2012 - 17:09 | Link to Comment ThirdWorldDude
ThirdWorldDude's picture

...Or they simply choose to take the Danish approach of dealing with rating agencies:

 

http://www.businessweek.com/news/2012-04-18/danish-banks-fire-moodys

Mon, 05/14/2012 - 16:43 | Link to Comment Mr.Kowalski
Mr.Kowalski's picture

Oh well-- looks like some counterparties will have to put up some add'l capital. 

Mon, 05/14/2012 - 16:47 | Link to Comment scatterbrains
scatterbrains's picture

Is that why JEF looked kinda MFG'ish today?

Mon, 05/14/2012 - 16:44 | Link to Comment time2blowitup
time2blowitup's picture

These assholes sure are ahead of the curve!

Mon, 05/14/2012 - 16:46 | Link to Comment Boilermaker
Mon, 05/14/2012 - 16:51 | Link to Comment Mark123
Mark123's picture

This is totally classic.....the rally monkey.  CNBC/FOX....

 

I am still laughing!!!!!!!

Mon, 05/14/2012 - 16:58 | Link to Comment CvlDobd
CvlDobd's picture

Stupid angel fans!

Everyone knows secular bulls start with rally squirrels! Go Cardinals!

Mon, 05/14/2012 - 16:47 | Link to Comment max2205
max2205's picture

No prob. GS and JPM long CDS. MIS thanks for helping out your buds.

Perfect. Well played

Mon, 05/14/2012 - 16:47 | Link to Comment williambanzai7
williambanzai7's picture

PARANORMAL EURO PHENOMENA

Mon, 05/14/2012 - 16:59 | Link to Comment El Oregonian
El Oregonian's picture

I find this whole Italian financial Armageddon thing very "Flaccid-nating"...

Mon, 05/14/2012 - 16:59 | Link to Comment williambanzai7
williambanzai7's picture

You want to know what is paranormal about this. Some bird inside my head said do someting about Italy this afternoon. This was done several hours ago. I had no idea what shit would hit the fan...

Mon, 05/14/2012 - 16:45 | Link to Comment Mr.Kowalski
Mr.Kowalski's picture

Ya gotta wonder if it would'nt be better for the people of Italy if we brought back Alaric to sack Rome and take over again. 

Mon, 05/14/2012 - 16:47 | Link to Comment surf0766
surf0766's picture

facebook IPO will save them. All aboard !!!!!!!!!!!!!!!!!!!!!!!!!!!

Mon, 05/14/2012 - 16:50 | Link to Comment The trend is yo...
The trend is your friend's picture

Friday can't come soon enough for morgan stanley and zuckerberg

Mon, 05/14/2012 - 17:07 | Link to Comment CClarity
CClarity's picture

And California's widening budget gap!

Mon, 05/14/2012 - 17:30 | Link to Comment Sudden Debt
Sudden Debt's picture

THAT is the big ipo of the year... And we wonder why our countries are going down the shitters... Facebook... I fucking hate... I don't use it, never will. And now they are trying to charge money for people who want to profile their own pages a bit more... Who would pay for that?

Mon, 05/14/2012 - 21:05 | Link to Comment WonderDawg
WonderDawg's picture

FB has to be the most ridiculous, narcissistic, look-at-me-dammit!-BS ever. I think it makes the perfect IPO to mark the top of a bullshit market.

Mon, 05/14/2012 - 16:48 | Link to Comment debtor of last ...
debtor of last resort's picture

Moody's just added something usefull to the economy. Another 145 pages of bullshit. Well yes, as a student, you have to do something apparently.

Mon, 05/14/2012 - 16:48 | Link to Comment trampstamp
trampstamp's picture

Bulltrap... i  mean bullshit!

Mon, 05/14/2012 - 17:32 | Link to Comment Sudden Debt
Sudden Debt's picture

Bulltrap? ... I guess the bull is already roasting on the BBQ man... Ad his nalls are floating in a pickled jar...

Mon, 05/14/2012 - 16:52 | Link to Comment wretch
wretch's picture

Like rating shits as they circle the bowl.  Please, no bailouts.

Mon, 05/14/2012 - 16:53 | Link to Comment carbonmutant
carbonmutant's picture

Looks like the Socialist Cargo Cult is still alive in Italy...

Mon, 05/14/2012 - 16:52 | Link to Comment BLACK_DOG
BLACK_DOG's picture

I didnt read it all. :)

Mon, 05/14/2012 - 17:32 | Link to Comment Sudden Debt
Sudden Debt's picture

It's okay, as long as you promise you'll read the next all out downgrade report.

That's why I love my Ipad, I select the text and use the text to speech module. It sounds a bit like the bears but at least I don't have to read that crap :)

Mon, 05/14/2012 - 16:54 | Link to Comment midgetrannyporn
midgetrannyporn's picture

This must be the time to buy. lulz

Mon, 05/14/2012 - 16:55 | Link to Comment buzzsaw99
buzzsaw99's picture

If they had upgraded them it would be time to panic:

 

Moody's upgrades Bear Stearns (senior to Aa2 from Baa1). 25 Mar 2008 ...

Mon, 05/14/2012 - 17:02 | Link to Comment Mark123
Mark123's picture

I can't believe we are still listening to these clowns.

Mon, 05/14/2012 - 17:03 | Link to Comment El Oregonian
El Oregonian's picture

Moody's? The Warren Buffet's Moodys??? Dumbass should of stuck with gold.

Mon, 05/14/2012 - 17:00 | Link to Comment Mark123
Mark123's picture

I think the primary dealers will keep the market bouyant until the Facebook IPO is done.  They need that to be successful otherwise all the muppets will get scared and go into hiding.

Mon, 05/14/2012 - 17:05 | Link to Comment surf0766
surf0766's picture

Still no headline on this..

Mon, 05/14/2012 - 17:05 | Link to Comment tuttisaluti
tuttisaluti's picture

within a year we will see lawsuits about financial terror. rating agencies will com under heavy fire.

Mon, 05/14/2012 - 17:06 | Link to Comment blunderdog
blunderdog's picture

So...uh....this means Moody's has caught onto the idea there may be problems in the Euro banking sector?

Mon, 05/14/2012 - 17:12 | Link to Comment RmcAZ
RmcAZ's picture

AllThatShit.txt

Mon, 05/14/2012 - 17:12 | Link to Comment Lost Wages
Lost Wages's picture

How do you say "ATM queue" in Italian?

Mon, 05/14/2012 - 17:17 | Link to Comment RmcAZ
RmcAZ's picture

If all the banks got downgraded, then did they really get downgraded? Is F- the new A+?

Mon, 05/14/2012 - 17:17 | Link to Comment Dermasolarapate...
Dermasolarapaterraphatrima's picture

"Negative outlook"

Come on, what kind of attitude is that?  You'll never be invited to CNBC with that crappy attitude.

Mon, 05/14/2012 - 17:21 | Link to Comment QuantumWampum
QuantumWampum's picture

Wait 'till the other rating agencies find out it's cheaper to downgrade in BULK.

Mon, 05/14/2012 - 17:42 | Link to Comment theTribster
theTribster's picture

Since the meanings of ratings can only be derived on a relative basis this isn't nearly as bad as it would seem. But hey, at least its something huh? Monti is trying so hard to make things right - for the banks. This is disgraceful as most/all of these banks are insolvent! Downgrade to oblivion. Maybe these downgrades are meant to be post the next LTRO and they just published them early - you know, to make things look better!

Short the equities, short the debt, short the currency, short anything and everything European. Still, thay are not likely to fail and dissappear, NWO has too much political will to let that happen. Thay are letting Greece go to the wire though, the next election will be worse for the NWO as the Greeks move further form the Euro and closer to the Drachma. They have to leave, and I think they have considerable leverage right now regardless of the rhetoric coming out of Germany and Brussels.

We'll see, I think they come up with a comprehensive plan for the zone, at least one they think will satisfy the markets regardless of its actual viability. Another package has to be huge in order to saolve the problems with perception (based on the  underlying reality), we're talking another LTRO based on massive printing. Also, they'll create a direct method of capital access for the sovereigns whether its via EuroBonds or some other mathod. The Germans have effectively approved printing more money, let's face it they need/want a substantially weakened Euro - printing helps :)

Love the move in Au and Ag today, back up the truck and start to fill it up with physical. It may get cheaper and probably will but we are close to a bottom in both metals. I still maintain that mid to late summer is the start of the end for the global financial systems - we'll reach a minsky moment after the next LTROs, QEs and other sovereign easings (see China) seep into the system. The PMs will go vertical at that point, the Fed won't be able to stop the moves that occur after this meltdown, infact more peinting after that point makes things worse (can you say hyperinflation?). I don't think we'll let it get there but we'll take major pain to stop it.

Have the CBs lost control? If not now then soon, at some point the system takes control and dictates the moves in spite of efforts by the powers that be.

Mon, 05/14/2012 - 18:55 | Link to Comment Mark123
Mark123's picture

Too true....very tempting to buy physical here.  The only thing keeping their ponzi scheme going is to keep trashing gold and creating EZ credit for bankers (to buy short treauries from the Fed) and EZ credit for the underemployed to buy new chevys, eat at McDonalds and shop at Walmart.

 

Rally on!!  USA USA USA!!!!!!!!!!!!!!

Mon, 05/14/2012 - 17:47 | Link to Comment RoadKill
RoadKill's picture

The market doesnt seem to care. TZA only up $0.10 in afterhours. FAZ up $0.12.

Doesnt Moody's know the market is open 8:30am to 8:00 pm.

Mon, 05/14/2012 - 17:45 | Link to Comment robertocarlos
robertocarlos's picture

Ferraris at fiat prices?

Mon, 05/14/2012 - 18:21 | Link to Comment gatorengineer
gatorengineer's picture

This wont move the market.  Market is waiting on what will or will not come out of the finance ministers meeting tomorrow.....  Will be interesting if they decide keeping Greece in for a year or two is worth say 500 Billion euros....

Mon, 05/14/2012 - 18:51 | Link to Comment Mark123
Mark123's picture

Why not just spend $100 billion and give everyone in Europe an all expense paid vacation in Greece.  Opa!  Everyone wins!!!!

 

With the $400 billion they save they can buy Facebook shares and never have to work ever again.  Double, super Opa!!!!!!!!!!!!!!!!

Mon, 05/14/2012 - 18:22 | Link to Comment penexpers
penexpers's picture

Fuck you, MEDIOCREDITO TRENTINO-ALTO ADIGE!

Mon, 05/14/2012 - 18:21 | Link to Comment rockraider3
rockraider3's picture

I'm sensing that Moody's is about to have some unknown Italian tax issues come to light in 3... 2.... 1...

Mon, 05/14/2012 - 18:47 | Link to Comment Mark123
Mark123's picture

this can't be true....as of 6:41 EST there is no mention of this on Yahoo finance.  Just lots of stuff about Groupon (apparently it is a cash machine)....I am going all-in and borrowing everything the bank will lend me and buying Groupon shares.  My children and grand children will marvel at my investing prowess.

Tue, 05/15/2012 - 01:55 | Link to Comment cnhedge
cnhedge's picture

US Daily: 2012 April FOMC Minutes Preview
http://www.cnhedge.com/thread-4528-1-1.html

Do NOT follow this link or you will be banned from the site!