Banco Popolare SC and Unione di Banche Italiane SCPA led decliners in Milan trading after Standard & Poor’s lowered its ratings on 18 Italian banks, citing higher economic risks.
Banco Popolare, Italy’s fourth-biggest bank, fell as much as 2 percent, and was down 1.8 percent to 1 euro at 10 a.m., giving the company a market value of 1.77 billion euros ($2.3 billion). Unione di Banche Italiane Scpa, the country’s fifth-largest lender, declined 2.6 percent to 3.19 euros, while Banca Popolare dell’Emilia Romagna Scrl fell 2.5 percent to 4.89 euros.
“Because of the increased economic risks we see for Italian banks, we believe they are now more exposed to a deeper and longer recession than we had previously anticipated,” the New York-based ratings company said in a statement late yesterday. S&P didn’t cut UniCredit SpA and Intesa Sanpaolo SpA, the country’s two biggest lenders, which had their ratings confirmed.
UniCredit was unchanged at 4.05 euros, while Intesa declined 0.9 percent to 1.4 euros.
“We agree that credit quality is the main risk for Italian banks and could worsen further if the gross domestic product bottom does not happen in the fourth quarter of 2013 and/or the recovery is too low/too slow,” Anna Maria Benassi, an analyst at Kepler Cheuvreux in Milan, wrote in a note today.
-- Editors: Dan Liefgreen, Mark Bentley