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S&P Downgrades 15 Italian Financial Institutions, Says Country Faces Deeper Recession Than Previously Thought

Tyler Durden's picture


It is late in the afternoon on a Friday, which means one thing: it is time to dump all left over bad news under the rug. Sure enough, here comes S&P. From Bloomberg:


Full release:

Standard & Poor's Ratings Services today said it has taken rating actions on 32 Italian financial institutions.

These include affirming our counterparty credit ratings on 15 entities,  lowering our ratings on 15, removing the ratings on four from CreditWatch  negative, and revising the outlook on one.

The rating actions reflect our view of increased credit risk for the Italian  economy and its banks. They follow our revision of our economic risk score for  Italy, one of the main components of our Banking Industry Country Risk Assessment (BICRA), to '5' from '4'. We have maintained our BICRA for Italy at group '4' and our industry risk score at '4' (see "BICRA On Italy Maintained
At Group '4', Economic Risk Score Revised To '5' On Increased Credit Risk For Italian Banks," published Aug. 3, 2012, on RatingsDirect on the Global Credit Portal).

With Italy facing a potentially deeper and more prolonged recession than we had originally anticipated, we think Italian banks' vulnerability to credit risk in the economy is rising. In this context, the combined effect of mounting problem assets and reduced coverage of loan loss reserves makes banks more vulnerable to the impact of higher credit losses particularly in the event of deterioration in the collateral values of assets.

In our opinion, a more severe recession will likely push up the stock of Italian banks' problem assets in 2012 and 2013 to levels higher than we previously expected and high relative to the stocks in other banking systems in Europe. At the same time, the banks' coverage of problem assets through provisioning, which was already low by international standards because of the banks' extensive use of tangible collateral in their assessment of provisioning needs, has fallen further over the past few years.

See the list below for the rating actions on the financial institutions and their relevant subsidiaries.

We will publish individual research updates on the banks identified below, including a list of ratings on affiliated entities, as well as the ratings by debt type--senior, subordinated, junior subordinated, and preferred stock.


The ratings listed below are issuer credit ratings unless otherwise stated.

Ratings Affirmed

Banca Fideuram                            BBB+/Negative/A-2

Banca Mediocredito del Friuli-Venezia Giulia SpA                                          BBB/Negative/A-3

Banco Popolare Societa Cooperativa SCRL Credito Bergamasco                        BBB-/Negative/A-3

Banca Aletti & C. SpA

Credito Emiliano SpA                      BBB/Negative/A-2

Intesa Sanpaolo SpA                       BBB+/Negative/A-2

Banca IMI SpA

Istituto Centrale delle Banche Popolari Italiane SpA

CartaSi SpA                               BBB-/Negative/A-3

Istituto per il Credito Sportivo          BBB+/Negative/A-2

Mediobanca SpA                            BBB+/Negative/A-2

MedioCredito Centrale SpA                 BBB-/Negative/A-3

UniCredit SpA                             BBB+/Negative/A-2

UniCredit Leasing SpA

                      To                  From

Banca Carige SpA                       BB+/Negative/B      BBB-/Negative/A-3

Banca di Credito Cooperativo di Conversano S.c.r.l                       BB+/Negative/B      BBB-/Negative/A-3

Banca Popolare dell'Alto Adige                       BBB-/Negative/A-3   BBB/Negative/A-2

Banca Popolare dell'Emilia Romagna S.C.                        BB+/Negative/B      BBB/Negative/A-2 

Banca Popolare di Vicenza ScpA                      BB+/Negative/B      BBB-/Negative/A-3

Dexia Crediop SpA                         B+/Negative/B       BB-/Negative/B

Eurofidi Scpa                       BB+/Negative/B      BBB-/Negative/A-3

Iccrea Holding SpA
Iccrea Banca SpA
Iccrea BancaImpresa SpA                       BBB-/Negative/A-3   BBB/Negative/A-2

Unione di Banche Italiane Scpa                          BBB/Negative/A-2    BBB+/Negative/A-2

Downgraded; CreditWatch Action

Agos-Ducato SpA       BBB-/Negative/A-3   BBB/Watch Neg/A-2

Banca Monte dei Paschi di Siena SpA                         BBB-/Negative/A-3   BBB/Watch Neg/A-2

Banca Popolare di Milano SCRL
Banca Akros SpA                       BB+/Negative/B      BBB-/Watch Neg/A-3

Outlook Action

FGA Capital SpA       BBB-/Negative/A-3   BBB-/Stable/A-3

CreditWatch Action; Ratings Withdrawn

                  Withdrawn   To               From
Cassa di Risparmio della Provincia di Teramo SpA                  N.R.        B/Negative/B     B/Watch Neg/B

NB. This list does not include all ratings affected.


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Fri, 08/03/2012 - 15:42 | 2676617 Hype Alert
Hype Alert's picture

Paging Mr. Draghi.  Pick up the red phone.

Fri, 08/03/2012 - 15:49 | 2676640 Meesohaawnee
Meesohaawnee's picture

bagdad bob would be more appropriate?

Fri, 08/03/2012 - 19:15 | 2677160 AldousHuxley
AldousHuxley's picture

Barilla pasta sauce going to go on sale soon.

Fri, 08/03/2012 - 19:48 | 2677215 Thomas
Thomas's picture

A recession that is deeper than they thought? Who is they? S&P? When did the thinking part come into the analysis? Italy is gonna look like somebody put an M-80 in the pasta sauce.

Fri, 08/03/2012 - 22:33 | 2677453 TrainWreck1
TrainWreck1's picture

Wow. Well this was unexpected.


Fri, 08/03/2012 - 21:23 | 2677347 Buck Johnson
Buck Johnson's picture

We are getting close to end game, we truly are.

Fri, 08/03/2012 - 15:43 | 2676620 Jlmadyson
Jlmadyson's picture

Red alert indeed Mr. Draghi.

Fri, 08/03/2012 - 15:44 | 2676625 surf0766
surf0766's picture

See, socialism works !

Fri, 08/03/2012 - 15:57 | 2676677 withnmeans
withnmeans's picture

Looks to me like S&P need to take a trip to ITALY, go ahead and dig deeper in their paperwork.. Italy is really in disarray, deplorable conditions "I wished that I was wrong, having been there in the last 12 months". 

It may not be long before the people rise up under these conditions "which are worse then Spain by far".

Good Luck Italy!!

Fri, 08/03/2012 - 16:55 | 2676826 Vaiman
Vaiman's picture

No need for concern.  The European politicians and financial heads will simply say....the downgrades mean nothing.  The markets will shrug their shoulders and say "whatever.  All is good.  Lets rock and roll some more!"

Sat, 08/04/2012 - 05:11 | 2677630 AldousHuxley
AldousHuxley's picture

go to most of red states......stupid ass rednecks who have never been out of their small towns, eating shitty fried food, shopping junk at walmart, cars parked in their lawns.....yeah US is no better than Italy.



Fri, 08/03/2012 - 17:31 | 2676905 zaphod42
zaphod42's picture

People don't "rise up" until they get hungry.  That will take a while, even in Greece and Italy. 


Of course, with the drought in the US that could be soon.  What will the leaders use to purchase food from Archer Daniels Midland next year? 


Hmm... maybe a buy on ADM?


Oh!  Wait!


How ironic.

Fri, 08/03/2012 - 15:45 | 2676626 Confundido
Confundido's picture

Markets should rally cuz now QE is more likely?

Fri, 08/03/2012 - 15:45 | 2676628 EscapeKey
EscapeKey's picture

Doesn't matter. At the end, every financial institution and sovereign rating will be junk, but equities will still be smoking hopium.

BUY THE DIP!!eleventyone11

Fri, 08/03/2012 - 16:51 | 2676818 Vaiman
Vaiman's picture

I agree.  The bulls seem unfazed.....when bad news hits....the markets drop very little and when a tiny little bit of good news comes out...the markets go beserk and drive things up like mad.  I am starting to think it will take nothing short of a complete meltdown to scare the shit out of the "all is good" crowd and cause a correction to get things to fair value.

Fri, 08/03/2012 - 20:02 | 2677235 CH1
CH1's picture

when a tiny little bit of good news comes out...the markets go beserk and drive things up like mad.

Yep, it is how they 'prove' that their denial is practical wisdom.

Fri, 08/03/2012 - 17:15 | 2676875 zaphod42
zaphod42's picture

So... what else do the high rollers do with all of their money?  Create jobs?  Of course they will bet on equities.  Unless they can gin up a Fed rate of less than zero, Bonds can only go down.

Fri, 08/03/2012 - 15:47 | 2676634 hugovanderbubble
hugovanderbubble's picture

Generali is in Default


Italian 10yrs gonna hit 10% and need debt haircuts from 5-35%



Wonder when SP will downgrade whole German;Swiss and Frenchbank + Insurers

Fri, 08/03/2012 - 15:56 | 2676671 PontifexMaximus
PontifexMaximus's picture

Not yet

Fri, 08/03/2012 - 16:45 | 2676804 tuttisaluti
tuttisaluti's picture

wait for the next tb auction

Sat, 08/04/2012 - 05:15 | 2677634 ejgej
ejgej's picture

Really? I wouldn't be so sure, look at its last trimestral...what film are U watchin' ?

Fri, 08/03/2012 - 15:47 | 2676635 Meesohaawnee
Meesohaawnee's picture

now SPY 1500 is a lock. .maybe by next friday

Fri, 08/03/2012 - 15:47 | 2676636 Rosman
Rosman's picture

ok...this phone is for local calls, and if this one rings we are in deep shit.

Fri, 08/03/2012 - 15:50 | 2676645 trebuchet
trebuchet's picture

the EU/ECB  QE package hasnt been designed and is clearly predicated on EFSF action which in turn requires that a country goes cap in hand and accepts conditionality (subjugation to Deutsche federation of euroland) before specific market intervention.


The only open question about ECB (forthcoming policy) is whether ECB can act on its own  - my guess is despite its talk it wont go for premature ejaculation of the SMP until all bits are in place ... and in the meantime keep the algos/muppets busy with " Im coming, Im coming.... "

Fri, 08/03/2012 - 15:50 | 2676646 SmoothCoolSmoke
SmoothCoolSmoke's picture

Isn't this release about 45 minutes too early?

Fri, 08/03/2012 - 15:50 | 2676648 Itch
Itch's picture

Who the fuck are S&P? (When they arent whores?)

Fri, 08/03/2012 - 15:51 | 2676652 Dr. Engali
Dr. Engali's picture

How far below "piece of shit" can a bank be rated?

Fri, 08/03/2012 - 15:51 | 2676654 Yen Cross
Yen Cross's picture

 The VIX needs some more "Tape Grenades" to chew on. Next week isn't going to be quiet. Lack of news will bring the nutjobs out.

Fri, 08/03/2012 - 15:52 | 2676656 Meesohaawnee
Meesohaawnee's picture

no no . the worse the news the bigger the ramp..git it? this is all designed to mask how fucked up things are. Man. .Hitler would have just been dying to see this. masterful!

Fri, 08/03/2012 - 15:54 | 2676661 LongSoupLine
LongSoupLine's picture

silver is bank and central bank kryptonite.  think ill buy some more.

Fri, 08/03/2012 - 15:59 | 2676687 Jlmadyson
Jlmadyson's picture

They will tie those hands.

No doubt it.

Fri, 08/03/2012 - 15:54 | 2676664 Moneyswirth
Moneyswirth's picture

Hey! Look over there! The Olympics are on!!

Fri, 08/03/2012 - 16:02 | 2676699 larz
larz's picture

..and Kim Kardashian lost 40

Fri, 08/03/2012 - 16:29 | 2676776 surf0766
surf0766's picture

still not enough.

Fri, 08/03/2012 - 15:56 | 2676670 Dr. Engali
Dr. Engali's picture

Remember way back when..the markets would sell off going into the weekend, because holding over the weekend could be risky?....Ahhhh those were the days.

Fri, 08/03/2012 - 16:04 | 2676710 Meesohaawnee
Meesohaawnee's picture

OMG i was thinking the same. Back in the day when there were actually human traders they would book their nice gift at 2:30 and go hit Rivers by the CME or something like that. there was even volume it seemed at the end but i could be wrong.

Fri, 08/03/2012 - 16:21 | 2676764 Dr. Engali
Dr. Engali's picture

No you aren't wrong. The volume would always pick up as there was some selling. I used to like hose markets. These are just no fun.They ramp it up then nothing. You might as well call it a day.

Fri, 08/03/2012 - 15:56 | 2676673 Meesohaawnee
Meesohaawnee's picture

and according to yahoo. child page. Jenna Jamison is gonna vote for romney..

Fri, 08/03/2012 - 15:57 | 2676679 Ineverslice
Ineverslice's picture

"These things gotta happen every five, ten years...helps get rid of all the bad blood."

"How bad do you think it will get?"

"Pretty damn bad..."

Fri, 08/03/2012 - 15:57 | 2676682 XtraBullish
XtraBullish's picture

BARBECUED shorts today across the board - the hedgies are all getting smoked with the largest NYSE short position in years!

"He who sells what isn;t his'n; must deliver or goes to prison!"

"Turn those machines back on; get back in there and BUY,BUY, BUY, you moron!"

Fri, 08/03/2012 - 15:57 | 2676684 Hype Alert
Hype Alert's picture

Has the VIX ever hit single digits?

Fri, 08/03/2012 - 16:02 | 2676698 Dr. Engali
Dr. Engali's picture

No. I have seen it hover around $10 in the past. Usually a good time to go short. Of course this time could be different. These markets are fucked up.

Fri, 08/03/2012 - 16:10 | 2676734 Hype Alert
Hype Alert's picture

2.2% off the high for the year, yet about to enter a global recession or worse.  Fucked up is right.

Sat, 08/04/2012 - 11:18 | 2677942 Bay of Pigs
Bay of Pigs's picture

I guess that's why it's called a "crack up boom"?

Of course nobody saw this coming. What bullshit.

Fri, 08/03/2012 - 16:01 | 2676691 larz
larz's picture

Help me Mr wizzard - I dont want to be the ECB president anymore......... twizzle twazzle etc time for RESET

Fri, 08/03/2012 - 16:01 | 2676693 Hetty Green
Hetty Green's picture



Fri, 08/03/2012 - 16:04 | 2676712 q99x2
q99x2's picture

They're going for the gold now.

Fri, 08/03/2012 - 16:05 | 2676716 YesWeKahn
YesWeKahn's picture

This kind of news always occur on Friday so that the equilty buyers can forget after a weekend. Dow to the moon on Monday!

Fri, 08/03/2012 - 16:07 | 2676718 lsbumblebee
lsbumblebee's picture

Hey who cares. Dow +200 is all that matters, and Cramer's gonna have a double deluxe extra chocolaty shit-eatin grin.

Have a weekend.

Fri, 08/03/2012 - 16:17 | 2676750 Hype Alert
Hype Alert's picture

So do the rating agencies include the perpetual funds required for an EU bailout in considering risks?  It seems the circular logic would go exponential.

Fri, 08/03/2012 - 17:08 | 2676858 Bunga Bunga
Bunga Bunga's picture

But but but those Italian banks were up today by 6-12% because of strong job numbers in the US.



Fri, 08/03/2012 - 17:24 | 2676893 Jlmadyson
Jlmadyson's picture

Crack-cocaine is a hell of a drug.

Makes ya get just so crazzzzzzy!

Fri, 08/03/2012 - 17:25 | 2676895 zaphod42
zaphod42's picture

About those "job numbers".  Somebody needs to tell ya what they are.

1.  Mostly part time jobs - like mowing someone else's lawn, working 20 hrs @ minimum wage, etc. 91,000

2.  Full time jobs, mostly paying minimum wage, about 12,000

3.  Fantasy jobs - the rest were made up from the whole cloth to juke up the market.

Of course, fantasy jobs is about what a fantasy market would respond to, isn't it? 

God, I love this job!



Fri, 08/03/2012 - 17:27 | 2676898 Divine Wind
Divine Wind's picture



I thought for sure that the U.S. was going to get downgraded again.

Next week, I guess.

Fri, 08/03/2012 - 17:59 | 2676965 Atomizer
Fri, 08/03/2012 - 18:03 | 2676975 sabra1
sabra1's picture

Italian women do! i heard Janet Napolitano has a good set!

Sat, 08/04/2012 - 15:31 | 2678375 Haager
Haager's picture

By using this language against honourable Mrs. Napolitano you will be considered a terrorist... (I need to vomit...)

Fri, 08/03/2012 - 18:27 | 2677052 Anglo Hondo
Anglo Hondo's picture

Second bank on the list is shown as Banca Mediocre dito.  You just can't make this shit up.  

Fri, 08/03/2012 - 19:16 | 2677161 zippy_uk
zippy_uk's picture

Calling Reggie Middleton, Calling Reggie Middleton

Fri, 08/03/2012 - 19:15 | 2677162 zippy_uk
zippy_uk's picture

Calling Reggie Middleton, Calling Reggie Middleton

Fri, 08/03/2012 - 20:42 | 2677288 f16hoser
f16hoser's picture

....and the difference between the Italian government and the US government is what?

Fri, 08/03/2012 - 21:59 | 2677407 IMA5U
IMA5U's picture

nobody cares


people are too short this market and are feeling PAIN

Fri, 08/03/2012 - 22:00 | 2677409 NOPOMO
NOPOMO's picture

This financial problem originated in the US and will end in the US.  The banksters and the FED are manipulating the system to make it appear as though the problems reside in Europe, but in fact the greatest problem is the US financial health.  This is all a game to distract the general public. 



Fri, 08/03/2012 - 23:01 | 2677484 Stuck on Zero
Stuck on Zero's picture

Shouldn't S&P issue ratings on Gold while they are at it?  Is Gold a BBB or an AAA? Without some reference point their estimations are useless.



Sat, 08/04/2012 - 03:06 | 2677587 silencemachine
silencemachine's picture

Italian banks are old (maybe obsolete) and traditional. No subprime or fantasy bucketshops financial products there. Does S & P knows that in those banks there is the second world money supply (mostly private savings) ? Do they know Italy has the third gold reserve of the world ? Do they know that one third of the Italian economy is submerged ? Believe me Italy never die ! Only people that knows that country and that people can understand.

Sat, 08/04/2012 - 05:10 | 2677628 ejgej
ejgej's picture

Yes, I agree, I don't see anyhow Italy sinking. Suffering a lot for sure, but still not sinkin'. The industrial export is near top 2008 levels, and still a 45% of the country is expected to go on holiday at sea or in the Alps this August.

Sat, 08/04/2012 - 05:00 | 2677625 ejgej
ejgej's picture

Ouch, but what is stunning is that on italian press nobody cares anymore about S&P downgrade, just small news, but no reaction at all from bankers and institutions.

Is it a good news, if it is no more worth answering and explaining to your public opinion?  But lookin' at the balance sheets of european and italian banks, they never had so many assets and liquidity as today, and this may well explain why nobody cares more of the 3 sisters. ...nice trick mr Draghi, nice trick!In the meantime eurobanks are filling up their vaults with european debt, bought with money lent by ECB at 1% with an interest  gain at 3%, so the 2% difference goes to clean some dirty balance sheets of some banks. Nice trick Mr Draghi, nice trick!

And if you keep gaming with declarations, as Ecb declares total war and the following day Buba denies, and if some eurobanks friend of the ECB know the game in advance, there's even a lot of money to do, and what's most important, somebody on the other side of the pond is going to lose a bunch of money. Again, what a good trick, Mr Draghi, what a good trick!



Sat, 08/04/2012 - 08:03 | 2677713 css1971
css1971's picture

S&P are late. As usual.

MIB is below 2008 crash levels. FTSE MIB

Or at least is was when I bought. I'm expecting some sort of minor "intervention" by the ECB and for it to bounce back up to just below the 2009 peak and decay from there back down to where we are now over about a year, maybe two. Unless the intervention is a proper (screw the poor) stagflationary boom in which case it'll take off. Course that won't happen with the current set of conservatives in Berlin.

Sat, 08/04/2012 - 09:29 | 2677800 BudFox2012
BudFox2012's picture

So does this mean the recovery is stalling?  </sarc>


Sat, 08/04/2012 - 15:35 | 2678384 Haager
Haager's picture

Is that the black swan? Italy may sink nearly (before asking for the bailout) but it surely will take others with it .


Rollercoaster ahead...

Sat, 08/04/2012 - 18:42 | 2678624 Snakeeyes
Snakeeyes's picture

Italy is clearly in deep trouble. High debt than Spain but lower budget deficits. Look at their debt rollover charts. Neither one is likely to survive in their current forms,

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