Senior unsecured ratings of two banks upgraded, junior senior ratings of two bank upgraded, junior senior ratings of one bank downgraded
Paris, July 13, 2021 -- Moody's Investors Service (Moody's) has today taken rating actions on
five Italian banks. The rating actions were driven by revisions
to Moody's Advanced Loss Given Failure (Advanced LGF) framework,
which is applied to banks operating in jurisdictions with Operation Resolution
Regimes, following the publication of Moody's updated Banks Methodology
on 9 July 2021. This methodology is available at this link:
https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1269625.
Please click on this link https://www.moodys.com/viewresearchdoc.aspx?docid=PBC_ARFTL448978
for the List of Affected Credit Ratings. This list is an integral
part of this Press Release and identifies each affected issuer.
All other Italian banks were unaffected by today's rating action
and the update of the Banks methodology.
RATINGS RATIONALE
Today's rating actions on five Italian banks were driven by revisions
to the Advanced Loss Given Failure framework within Moody's updated Banks
methodology.
In particular, ratings were impacted by revised notching guidance
table thresholds at lower levels of subordination and volume in the liability
structure, which have been applied to all Italian banks.
For Italian banks with overseas subsidiaries the rating actions also reflect
Moody's view that group-wide resolutions coordinated in a unified
manner will be more common following the requirement to issue internal
loss absorbing capital (ILAC), which could lead to a transfer of
losses from subsidiaries to parents, at the point of failure.
For banks that are subsidiaries of international parents and subject to
ILAC requirements the rating actions reflect the required and expected
issuance of such instruments. [The update further includes
the consideration of all Additional Tier 1 (AT1) securities issued by
banks domiciled in Italy in Moody's Advanced LGF framework,
eliminating the previous analytical distinction between those high trigger
instruments that were deemed to provide equity-like absorption
of losses before the point of failure and other AT1 securities].
RATINGS RATIONALE FOR INDIVIDUAL BANKS
- UniCredit S.p.A. (UniCredit)
Moody's downgraded the junior senior program ratings and junior senior
debt ratings of UniCredit to (P)Baa3 and Baa3 from (P)Baa2 and Baa2,
respectively.
The action reflects Moody's expectation that UniCredit S.p.A
will be resolved in a unified manner alongside its main overseas subsidiaries
in accordance with the adoption of the single point of entry resolution
strategy. The rating agency assess that issuance of loss absorbing
instruments from the group's subsidiaries domiciled in the European
Union to the parent bank will result in the transfer of losses to UniCredit
S.p.A. in a resolution scenario. The inclusion
of the Tangible Banking Assets of the subsidiaries within Moody's
Advanced LGF analysis results in no uplift from the bank's BCA from
previously one notch, which is reflective of higher losses that
junior senior debt will incur following a failure.
- Intesa Sanpaolo S.p.A. (Intesa Sanpaolo)
Intesa Sanpaolo's junior senior unsecured debt ratings were upgraded by
one notch to Baa3 from Ba1.
Under Moody's Advanced LGF analysis they are rated at the level
of the bank's BCA, which better captures the risk characteristics
of this class of debt following the agency's revised view around
the distribution of losses post failure.
Moody's also affirmed the subordinated programme ratings and subordinated
debt ratings of Intesa Sanpaolo at (P)Ba1 and Ba1 respectively.
Even though Moody's revised notching guidance table indicates the
bank's subordinated debt ratings at the level of the BCA,
a sustained level of subordination at the current level would be necessary
to warrant an upgrade of the current ratings.
The rating actions also reflect Moody's expectation that Intesa
Sanpaolo will be resolved in a unified manner alongside its main overseas
subsidiaries in accordance with the adoption of the single point of entry
resolution strategy. The rating agency assess that issuance of
loss absorbing instruments from the group's subsidiaries domiciled
in the European Union to the parent bank will result in the transfer of
losses to Intesa Sanpaolo in case of failure. The inclusion of
the Tangible Banking Assets of the subsidiaries within Moody's Advanced
Loss Given Failure analysis has no impact on Intesa Sanpaolo's ratings
despite the greater volume of losses the bank's liabilities will
be expected to absorb following a failure.
- Banco BPM S.p.A. (Banco BPM)
Moody's upgraded the long-term junior senior unsecured rating
of Banco BPM to Ba3 from B1.
Banco BPM's long-term junior senior rating was upgraded by
one notch to Ba3 from B1, as under Moody's Advanced LGF analysis
it is now rated in line with the BCA, which better captures the
risk characteristics of this class of debt following the agency's
revised view around the distribution of losses post failure.
Moody's also affirmed the senior unsecured debt ratings of Banco
BPM at Ba2. The affirmation follows Moody's revised notching
guidance table that maintains the bank's senior unsecured debt ratings
at one notch above the BCA; however the one-notch uplift from
the BCA is no longer based on Moody's forward-looking expectation
of material issuance of bail-in-able debt but rather on
the bank's current metrics.
- Banca Nazionale Del Lavoro S.p.A. (BNL)
Moody's upgraded the long-term senior unsecured debt rating
of BNL to Baa2 from Baa3.
BNL's long-term senior unsecured debt and issuer ratings
were upgraded by one notch to Baa2 from Baa3, as under Moody's
Advanced LGF analysis they are now rated in line with the Adjusted BCA,
which better captures the risk characteristics of this class of debt following
the agency's revised view around the distribution of losses post
failure.
- Credito Valtellinese S.p.A. (Creval)
Moody's upgraded the long-term senior unsecured debt rating
of Creval to Baa1 from Baa2.
Creval's long-term senior unsecured debt rating was upgraded
by one notch to Baa1 from Baa2, as under Moody's Advanced
LGF analysis it is now rated in line with the Adjusted BCA, which
better captures the risk characteristics of this class of debt following
the agency's revised view around the distribution of losses post
failure.
Creval's long-term senior unsecured debt rating benefits from one
notch of uplift stemming from our Advanced Loss Given Failure assessment
(from -1 previously) owing to the inclusion of Creval liabilities
in the resolution perimeter of Credit Agricole Italia following the acquisition
in June 2021. Please see our rating action on 3 June 2021 (https://www.moodys.com/research/--PR_447616).
Creval's ratings and assessments are now aligned with those of CA Italia,
reflecting Moody's expectation that the two banks will be merged and as
such Creval will cease to exist as a separate legal entity by early 2022.
OUTLOOK
The outlook on the senior unsecured debt ratings of BNL and Banco BPM
is stable.
The rating outlooks of the other banks affected by today's rating action
remain unchanged.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The affected long-term deposit ratings, senior unsecured
debt ratings, issuer ratings, CRRs and CR Assessments could
be upgraded following an improvement in the standalone creditworthiness
of the banks, or an upgrade of the relevant country sovereign debt
rating.
The long-term deposit, senior unsecured debt ratings,
and issuer ratings could also be upgraded following a significant increase
in the stock of more junior bail-in-able liabilities.
The affected ratings and assessments could be downgraded following a substantial
deterioration in the standalone creditworthiness of the banks or following
a significant reduction in the stock of bail-in-able liabilities.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Banks Methodology
published in July 2021 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1269625.
Alternatively, please see the Rating Methodologies page on www.moodys.com
for a copy of this methodology.
REGULATORY DISCLOSURES
The List of Affected Credit Ratings announced here are a mix of solicited
and unsolicited credit ratings. Additionally, the List of
Affected Credit Ratings includes additional disclosures that vary with
regard to some of the ratings. Please click on this link https://www.moodys.com/viewresearchdoc.aspx?docid=PBC_ARFTL448978
for the List of Affected Credit Ratings. This list is an integral
part of this Press Release and provides, for each of the credit
ratings covered, Moody's disclosures on the following items:
• EU Endorsement Status
• UK Endorsement Status
• Rating Solicitation
• Issuer Participation
• Participation: Access to Management
• Participation: Access to Internal Documents
• Disclosure to Rated Entity
• Lead Analyst
• Releasing Office
For further specification of Moody's key rating assumptions and
sensitivity analysis, see the sections Methodology Assumptions and
Sensitivity to Assumptions in the disclosure form. Moody's
Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.
For ratings issued on a program, series, category/class of
debt or security this announcement provides certain regulatory disclosures
in relation to each rating of a subsequently issued bond or note of the
same series, category/class of debt, security 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 certain
regulatory disclosures in relation to the credit rating action on the
support provider and in relation to each particular credit rating action
for securities that derive their credit ratings from the support provider's
credit rating. For provisional ratings, this announcement
provides certain 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.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this credit rating action,
and whose ratings may change as a result of this credit rating action,
the associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Moody's general principles for assessing environmental, social
and governance (ESG) risks in our credit analysis can be found at http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1288435.
The below contact information is provided for information purposes only.
Please see the ratings tab of the issuer page at www.moodys.com,
for each of the ratings covered, Moody's disclosures on the
lead rating analyst and the Moody's legal entity that has issued
the ratings.
The relevant office for each credit rating is identified in "Debt/deal
box" on the Ratings tab in the Debt/Deal List section of each issuer/entity
page of the website.
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.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Fabio Ianno
VP - Senior Credit Officer
Financial Institutions Group
Moody's France SAS
96 Boulevard Haussmann
Paris 75008
France
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454
Alain Laurin
Associate Managing Director
Financial Institutions Group
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454
Releasing Office:
Moody's France SAS
96 Boulevard Haussmann
Paris 75008
France
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454
