S&P improves view on two Italian banks

S&P said it revised its outlooks for Iccrea Banca SpA to positive from stable and MedioCredito Centrale SpA to stable from negative. The agency affirmed both banks’ ratings.

On Iccrea, “We revised our rating outlook to positive based on our view that, notwithstanding still-weaker asset quality and higher NPEs than peers', the group has improved its asset quality metrics and will continue making significant progress in strengthening its risk management and governance. This, paired with higher capitalization, will help it better navigate a likely economic slowdown in Italy in the coming months. We also consider that over 30% of Iccrea's SME loans are backed by public guarantees, which provides it with an additional cushion if credit losses rise in that segment,” the agency said in a press release.

“We revised our outlook on MedioCredito Centrale (MCC) to stable from negative primarily because we factor in the likelihood of the bank receiving capital support from its main shareholder Invitalia, which is 100% owned by the government, in the coming months. The government would sustain MCC's mandate to support investment in economically depressed areas in southern Italy and provide a cushion to clean up asset quality at recently acquired Banca Popolare di Bari and cover legal risk. For this reason, we now see diminished risk that any potential rise in credit may hamper the bank's solvency position,” the agency said.

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