MOODY'S CONFIRMS RATINGS OF BANCA NAZIONALE DEL LAVORO (SENIOR AT A2); RAISES RATINGS OF BANCO DI NAPOLI TO SENIOR Baa2
London, 06-25-97 -- Moody's Investors Service confirmed the A2/Prime-1 long deposit ratings and the D+ financial strength rating of Banca Nazionale del Lavoro (BNL). At the same time, Moody's raised Banco di Napoli's deposit ratings to Baa2/Prime-2, from Ba1/Not Prime, and its financial strength rating to E+ from E. These rating actions follow the recent completion of the acquisition by BNL of a significant minority holding in Banco di Napoli, and conclude the reviews initiated in late 1996.
Moody's said that BNL's ratings reflect that the bank is well positioned to absorb and manage its investment in Banco di Napoli in the short-term. The ratings also reflect the likelihood that in the medium-term BNL and Banco di Napoli will merge, and that such a merger would be followed by the eventual privatization of the combined bank.
Banco di Napoli's ratings reflect the substantial improvement in the bank's balance sheet strength, its ongoing efforts to restructure its operations, and the positive impact of the anticipated capital injection from its new shareholders. Through a major bailout plan, the bank's massive non-performing loan burden has recently been transferred to a state-guaranteed company, with any realised losses effectively being taken by Italy's central bank. The ratings also reflect that Banco di Napoli's recovery remains at a comparatively early stage, and the restoration of its core profitability should continue to be a major challenge. At the same time, Moody's added that the improvements in Banco di Napoli's earning power and financial fundamentals achieved so far support a positive outlook for its ratings.
Moody's said that the Italian Treasury recently sold 60% of the ordinary shares of Banco di Napoli to Banco di Napoli Holding, a company which is 51% owned by INA, one of the leading life insurance companies in Italy, and 49% owned by BNL. The consideration of Lit 61.6 billion (US$ 36 million) reflected the requirement for a further capital injection by its new shareholders into Banco di Napoli of approximately Lit 1,300 billion, as well as the absence of any goodwill element.
In the short-term, Banco di Napoli will be controlled through Banco di Napoli Holding by a joint management team from INA and BNL in co-ordination with Banco di Napoli's own directors. Ultimately the objective is for the two banks to merge, although the costs and manner of such a merger have not yet been determined. On a proforma basis the combined bank would rank second in Italy by gross assets. In Moody's view the franchises and networks of the two banks would fit well, without significant overlaps. Such a merger would likely pave the way for the reduction by the Treasury of its majority shareholding in BNL.
Moody's noted BNL's recent progress in refocusing on its domestic franchise and simplifying its group structure, as well as its continuing efforts to rationalise its cost base. The bank's stable, if somewhat low, core profitability, together with its recently strengthened capital position, should enable it to accomodate its investment in Banco di Napoli without straining its creditworthiness, Moody's added.
The following ratings were confirmed:
BNL S.p.A. -- the long-term deposit and senior debt ratings of A2, the subordinated debt rating of A3, the short-term deposit rating of Prime-1, the bank financial strength rating of D+, and the counterparty rating of A2.
BNL S.p.A., Hong Kong -- the subordinated debt rating of A3.
BNL S.p.A., London -- the senior debt rating of A2.
BNL International S.A. -- the guaranteed debt rating of A2.
BNL US Corporation -- the guaranteed short-term commercial paper rating of Prime-1.
Lavoro Bank Overseas N.V. -- the guaranteed debt rating of A2.
The following ratings were raised:
Banco di Napoli S.p.A. -- the long-term deposit and debt ratings, from Ba1 to Baa2; the short term deposit rating, from Not-Prime to Prime-2; and the financial strength rating, from E to E+.
Banco di Napoli International S.A. -- the subordinated debt rating, from Ba3 to Ba1.
Banco di Napoli (Hong Kong) -- the subordinated debt rating, from Ba3 to Ba1.
Banco di Napoli S.p.A. (London) -- the senior debt rating, from Ba1 to Baa2; the subordinated debt rating, from Ba3 to Ba1.
BdN Commercial Paper USA, Inc. -- the short-term rating of the company for commercial paper, guaranteed by Banco di Napoli S.p.A., from Not-Prime to Prime-2.
Banca Nazionale del Lavoro, headquartered in Rome, is majority owned by the Italian Treasury and had total assets of Lit 173 trillion (approximately US$ 103 billion) at end-1996. Banco di Napoli, headquartered in Naples, had total assets of Lit 71 trillion (approximately US$ 42 billion) at end-1996.
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