15 maggio 2012

Nessuna sorpresa

Come anticipato anche su questo blog, Moody's ha declassato il rating di 26 istituti di credito italiani, che adesso hanno il merito creditizio tra i più bassi tra i paesi europei avanzati.

In basso una tabella riassuntiva dei ratings (click per ingrandire) e di seguito la parte più importante del comunicato di Moody's.

Si tratta di un'analisi condivisibile quasi totalmente, fatta eccezione per una sorprendente sottovalutazione dei rischi sistemici associati alla fragilità degli Istituti di dimensioni maggiori, il cosiddetto too-big-to-fail risk, e per il consueto ritardo con cui le decisioni sul rating adeguano lo standing creditizio alle condizioni macro e microeconomiche correnti.

Naturalmente ci aspettiamo anche il solito coro di riprovazione per le azioni di queste maligne agenzie di rating...      

Moody's downgrades Italian banks; outlooks remain negative
Global Credit Research - 14 May 2012
Actions conclude the review announcements of 15 February 2012 and other dates
Milan, May 14, 2012 -- Moody's Investors Service has today downgraded by one to four notches the long-term debt and deposit ratings for 26 Italian banks, including five banks that are part of larger groups. In almost all cases, the rating actions reflect concurrent downgrades of these banks' standalone credit assessments, rather than changes in Moody's assumptions about levels of third party support, including Government support.
The debt and deposit ratings declined by one notch for 10 banks, two notches for eight banks, three notches for six banks, and four notches for two banks. The short-term ratings for 21 banks have also been downgraded by one to two notches, triggered by the long-term rating downgrades. The rating outlooks for all affected entities are negative; a Moody's rating outlook is an opinion regarding the likely direction of an issuer's rating over the medium term.
Furthermore, Moody's changed the rating outlooks for the standalone BFSR of five Italian banks to negative from stable. The debt and deposit ratings for nine more Italian banks remain on review for further downgrade, for reasons specific to each bank.
A full list of affected ratings can be found at this link http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_142105
For additional information on bank ratings, please refer to the webpage containing Moody's related announcements: http://www.moodys.com/bankratings2012
The ratings for Italian banks are now amongst the lowest within advanced European countries, reflecting these banks' susceptibility to the adverse operating environments in Italy and Europe. Today's rating actions reflect, to differing degrees for each affected bank, the following key drivers:
1.) Increasingly adverse operating conditions, with Italy's economy back in recession and government austerity reducing near-term economic demand;
2.) Mounting asset-quality challenges and weakened net profits, as problem loans and loan-loss provisions are rising; and
3.) Restricted access to market funding which, if persistent, will exert added pressure on banks to reduce assets, posing risks to their franchises and earnings.
Furthermore, recent events highlight the risks for creditors from potential weaknesses in governance, controls and risk management, especially at some smaller, privately-held banks. In addition, today's actions reflect drivers specific to some banks, which are detailed at the end of this release.
Moody's notes that several mitigating issues have limited the magnitude of the downgrades. Specifically, Moody's cites the substantial liquidity support that the European Central Bank (ECB) has made available, significantly reducing near-term default risk. Furthermore, many banks have strengthened their capital levels and continue to generate sizeable pre-provision earnings under difficult conditions.
Nevertheless, given already elevated problem loan levels and weakened profitability, Italian banks are particularly vulnerable to adverse operating conditions, which are likely to cause further asset quality deterioration, earnings pressure, and restricted market funding access. These risks are exacerbated by investor concerns over the sustainability of the Italian government's debt burden, which has contributed to the difficult wholesale funding conditions faced by Italian banks.
The rating outlooks for all banks affected by today's actions are negative. The revised rating levels reflect currently foreseen risks and the ratings are expected to be resilient to a degree of further stress. However, Moody's considers that there are several factors that could cause further downward adjustments, such as (i) increasing funding stress; (ii) a prolonged recession; (iii) crystallisation of corporate governance, control and risk management weaknesses; or (iv) further weakening of the Italian government's creditworthiness. Moody's noted that the potential for further rating transition is heightened by the possibility of rapid increases in problem loans, as has been evident following supervisory inspections of certain Italian banks.
Moody's has published a special comment today titled "Key Drivers of Italian Bank Rating Actions," (http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_141195) which provides more detail on the rationales for these rating actions. For more information on bank ratings, please refer to the webpage containing Moody's related announcements: http://www.moodys.com/bankratings2012.
As stated, today's rating actions primarily reflect Moody's view that the standalone credit strength of the affected banks has weakened. Based on their standalone creditworthiness, the banks downgraded today now fall into the following four broad groups:
- The first group comprises UniCredit (deposit rating A3; bank standalone bank financial strength rating (BFSR) C- / baseline credit assessment (BCA) baa2) and Intesa Sanpaolo (deposits A3; BFSR C- / BCA baa1), which together account for almost one third of the Italian market by assets. Their standalone credit assessments reflect solid, diversified franchises that generate sizeable pre-provision earnings.
- The second group (six banks) comprises other Italian banks with standalone profiles of baa3 or higher -- including the fifth-largest bank, Unione di Banche Italiane (deposits Baa2; BFSR D+ / BCA baa3). Banks in this group are better positioned than most domestic peers to cope with the current recession, helped by overall solid franchises and above-average earnings capacity.
- The third group (seven banks) consists of banks with ba1 standalone credit assessments. These institutions -- including the fourth-largest Banco Popolare (deposits Baa3; BFSR D+ / BCA ba1) -- face more significant challenges, often including a combination of weak capital levels under Moody's adverse scenarios, insufficient internal capital generation and funding constraints.
- The fourth group (11 banks) comprises banks with standalone credit assessments below ba1, including the third-largest Banca Monte Dei Paschi (deposits Baa3; BFSR D / BCA ba2). This bank faces more substantial challenges, often due to asset quality, capital and/or funding issues.
An important driver of today's action is the banks' deteriorating operating environment, as demonstrated by Italy's relapse into recession in early 2012, with no clear signs of recovery. This deterioration followed a brief and shallow recovery after the 2008-09 recession and many prior years of slow growth. Italy's GDP is still below the level it recorded in 2007. Moreover, Moody's notes that the Italian government's austerity measures and structural reforms are weighing on the country's near-term economic outlook. Moody's expects the weak economic environment to cause further growth in loan delinquencies, particularly for corporate and small business borrowers; as well as persistent high provisioning costs, restricted revenue growth and ongoing investor concerns.
Most banks affected by today's rating actions already have elevated levels of problem loans, and their net earnings are weakened by substantial loan-loss provisioning expenses. Consequently, they are vulnerable to further asset-quality deterioration caused by the renewed recession and the ongoing euro area debt crisis, which has led to high inflows of problem loans in 2011. The resulting high provisioning costs may further erode net profitability and could weaken some banks' capital levels.
The third driver underlying today's rating action is the increased uncertainty and risk resulting from the prolonged period of restricted market access for most Italian banks. These banks complement their core retail deposit and retail bond funding with less stable market funding, which funded approximately 36% of rated banks' total assets at year-end 2011. Indicating funding pressures, Italian banks' debt issuance fell sharply in second-half 2011. Though Moody's-tracked debt issuance of Italian banks (mostly long-term bonds) recovered in first-quarter 2012, at their recent pace new debt issuances would not fully cover the amounts maturing in 2012.
Due to the continuing euro area debt crisis, access to non-retail funding sources has become more costly and restricted and has led many of these banks to borrow significant amounts from the ECB. Gross ECB borrowings of Italian banks amounted to EUR271 billion at the end of April 2012, up sharply from EUR41 billion at the end of June 2011; the current level is amongst the highest in Europe. The availability of three-year funds from the ECB has mitigated near-term funding stress; however, the significant reliance on such funds raises the issue of whether these banks will be able to normalise their funding bases over the medium-term.
Moody's recognises that many Italian banks rely more on retail funding (including bonds issued to retail investors) than some European peers. However, balance sheet growth in recent years has increasingly been funded by market funds, resulting in loan-to-deposit ratios significantly above 100% even for traditionally retail-funded institutions. Structural reliance on market funds now poses a key challenge for many banks.
In most cases, Moody's did not change its assumptions about the availability of support from a bank's parent, its cooperative group, regional or local government or the central government. The sovereign's own reduced credit strength -- reflected in the recent government bond rating downgrade to A3, with a negative outlook, from A2 -- did not cause any of today's downgrades following reduced capacity of support embedded in the sovereign rating (see press release http://www.moodys.com/research/Moodys-adjusts-ratings-of-9-European-sove..., 13 February 2012).
Our assessment of Italy's cooperative group (Banche di Credito Cooperativo) led to a reduction of the uplift due to cooperative support factored into the debt and deposit ratings for several members of this group.
In addition, Moody's has today downgraded the subordinated and hybrid ratings for 17 Italian banks by one to five notches. For banks whose senior subordinated debt ratings had incorporated assumptions about government (or systemic) support, these assumptions have been removed. The removal of support from this debt class reflects Moody's view that in Italy, systemic support for subordinated debt may no longer be sufficiently predictable or reliable to be a sound basis for incorporating uplift into Moody's ratings. (For more detail, see 29 November 2011 announcement "Moody's reviews European banks' subordinated, junior and Tier 3 debt for downgrade, http://www.moodys.com/research/Moodys-reviews-European-banks-subordinate...)
In addition, Moody's now rates junior subordinated debt two notches (previously one notch) below a bank's adjusted baseline credit assessment (which reflects a bank's standalone strength, parent and cooperative group support, but not government support).
Today's rating actions follow Moody's decision to review for downgrade the ratings for 114 European financial institutions, including Italian banks (see "Moody's reviews Ratings for European Banks", 15 February 2012 (http://www.moodys.com/research/Moodys-Reviews-Ratings-for-European-Banks...). Some banks downgraded today had been placed on review for downgrade on other dates (see Moody's reviews for downgrade Banca Monte dei Paschi di Siena's ratings, 2 February 2012 (http://www.moodys.com/research/Moodys-reviews-for-downgrade-Banca-Monte-...); Moody's reviews for downgrade UniCredit's A2/C- ratings (Italy), 16 November 2011 (http://www.moodys.com/research/Moodys-reviews-for-downgrade-UniCredits-A...); Moody's reviews Banca Popolare di Spoleto's ratings for downgrade (Italy), 27 October 2011 (http://www.moodys.com/research/Moodys-reviews-Banca-Popolare-di-Spoletos...); Moody's reviews Mediocredito Trentino-Alto Adige's D+ BFSR for downgrade, 3 April 2012 (http://www.moodys.com/research/Moodys-reviews-Mediocredito-Trentino-Alto...); Moody's reviews Cassa Centrale Banca, Cassa Centrale Raiffeisen and Banca Padovana for downgrade, 3 April 2012 (http://www.moodys.com/research/Moodys-reviews-Cassa-Centrale-Banca-Cassa...).
Separate from today's actions, Moody's has recently downgraded the ratings for Banca Tercas (see "Moody's downgrades Banca Tercas to B3/E+; ratings remain on review for downgrade", 7 May 2012; http://www.moodys.com/research/Moodys-downgrades-Banca-Tercas-to-B3E-rat...) and Banca Monastier (see "Moody's downgrades Banca Monastier e del Sile to B2/E+; ratings remain on review for downgrade", 8 May 2012; http://www.moodys.com/research/Moodys-downgrades-Banca-Monastier-e-del-S...)
Upgrades of the banks' ratings are unlikely in the near term, given the factors previously cited that have led to our continuing negative outlooks. However, a limited amount of upward rating pressure could develop if any bank substantially improves its credit profile and resilience to the prevailing conditions. This may occur through increased standalone strength, e.g. bolstered capital and liquidity buffers, work-out of asset quality challenges or improved earnings. Improved credit strength could also result from external support, e.g. via a change in ownership or the receipt of capital or liquidity injections.
Several factors could cause further downward rating changes, such as (i) increasing funding stress and reliance on central bank support, which would raise pressure on banks to deleverage, with adverse consequences for asset quality; (ii) a prolonged recession, which could similarly further exacerbate already adverse asset-quality trends and impair capital; or (iii) a weakening of the Italian government's credit strength.
For further detail please refer to:
- List of Affected Issuers (http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_142105), 14 May 2012
- Special Comment: Key Drivers of Italian Bank Rating Actions, 14 May 2012
- Press Release: Moody's Reviews Ratings for European Banks, 15 Feb 2012
- Special Comment "How Sovereign Credit Quality May Affect Other Ratings", 13 Feb 2012.
- Special Comment: Euro Area Debt Crisis Weakens Bank Credit Profiles, 19 Jan 2012
- Special Comment: European Banks: How Moody's Analytic Approach Reflects Evolving Challenges, 19 Jan 2012

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