August 4, 2012
“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,” S&P said in a statement.
“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,” it said.
Among the rating agency’s moves, S&P cut Banca Monte dei Paschi di Siena to BBB-minus from BBB, just one notch above junk.
Banca Carige fared less well, losing its BBB-minus investment grade rating in a cut to BB-plus.