S&P Slices Italian Bank Ratings
Standard & Poor's cut the ratings of 24 Italian banks and financial institutions on Tuesday, citing weaker economic growth prospects and tighter credit conditions in the debt-stressed euro zone.
S&P's move against lenders including Banca Monte dei Paschi di Siena and UBI Banca underscored concerns about the impact of the euro zone debt crisis on the sector. .
S&P had already cut the ratings of seven leading Italian banks in September, following its one-notch downgrade on Italian sovereign debt.
"In our opinion, renewed market tensions in the euro zone's periphery, particularly in Italy, and dimming growth prospects have led to further deterioration in the operating environment for Italian banks," S&P said.
S&P said Italian banks' profitability could decline in the next couple of years because of rising funding costs and volatile stock markets, adding it did not see the difficult economic climate as transitory.
"We are also of the view that Italy's slowing economic growth in 2012 could impede improvements in Italian banks' asset quality and further strain their creditworthiness", it said.
The outlook on 22 of 43 Italian financial institutions is now negative, S&P said, indicating the possibility of further downgrades if the government fails to cut the public debt burden and kickstart growth.
Last week, Fitch cut Intesa Sanpaolo , UBI Banca, and MPS, citing below-trend economic growth, ongoing sovereign risks and ambiguities of additional bank regulation. Fitch and S&P also cut Spanish banks. (Reporting by Herbert Lash, Antonella Ciancio in Milan; Editing by Chizu Nomiyama and Dan Lalor)