MOODY'S ASSIGNS A3/P-2 DEPOSIT RATINGS AND A D+ FINANCIAL STRENGTH RATING TO BANCA POPOLARE DI LODI (ITALY)
Moody's Investors Service assigned A3 and Prime-2 long- and short-term deposit ratings and a D+ financial strength rating to Banca Popolare di Lodi (BPL), all with a positive outlook. According to Moody's the ratings reflect the bank's good regional franchises and full product range, and the potential benefits of recent acquisitions, while taking into account the significant integration challenges these present, and the BPL group's still more modest financial fundamentals.
BPL is a co-operative bank based in Lodi, near Milan in northern Italy, where it has a strong local franchise. The group also controls banks operating in a number of regions throughout Italy. During 1999 and into 2000 BPL has made three major acquisitions - ICCRI-BFE, Efibanca and Casse del Tirreno. These, and other smaller acquisitions have widened its regional banking franchise, and strengthened its product range, in particular in asset management, insurance, corporate lending and investment banking. The acquisitions have seen the group's size, measured by total assets, increase threefold, from Euro 8.6 billion at 1998 year-end to Euro 26.1 billion at the end of 1999, so becoming Italy's 9th largest banking group. Moody's said that it views these acquisitions positively. However the rating agency added that managing expansion by acquisition on this scale presents significant challenges, both in terms of establishing firm control over the group, and delivering the projected cost and income benefits.
According to Moody's BPL's financial fundamentals are relatively modest, compared to its peers among Italian banks, in areas such as profitability and cost efficiency. The recent acquisitions are expected to deliver cost and revenue synergies which should enable BPL to strengthen its position in this respect. Moody's said that the positive rating outlook reflects its view that the acquisitions have the potential to strengthen BPL's franchise in the rapidly consolidating Italian banking market, and the expectation that strong action will be taken to drive out these benefits in a timely manner.
The following ratings were assigned:
Banca Popolare di Lodi Scarl: long-term deposits at A3; short-term deposits at Prime-2; bank financial strength at D+
Banca Popolare di Lodi is headquartered in Lodi, Italy. At 31st March 2000 it had total assets of Lit 47.5 trillion (approximately Euro 24.5 billion or USD 23.2 billion).
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