Nov. 20 (Bloomberg) -- Banca Leonardo cut its ratings on Italian regional banks Credito Emiliano SpA and Banca Popolare di Milano SpA to ``underweight'' from ``buy,'' citing third-quarter earnings and rising provisions for bad loans.

Credito Emiliano's ``third-quarter results and the tough expectations for the full year'' are the reasons for the cut, Banca Leonardo analysts Anna Maria Benassi, Daniela Miccolis and Gianantonio Villani wrote in a research note published today. Popolare di Milano faces an increase in provisions and weakening revenue through 2009, they said.

Bologna, Italy-based Credito Emiliano fell 2 percent to 4 euros as of 10:32 a.m. in Milan. Popolare Milano rose 1.2 percent to 3.87 euros.

Banca Leonardo cut its price estimates for Credem and Popolare Milano to 4.8 euros from 5.5 euros.

To contact the reporter on this story: Alessandra Migliaccio at amigliaccio@bloomberg.net

Last Updated: November 20, 2008 05:53 EST