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BANCA MONTE DEI PASCHI DI SIENA S.P.A.

(BMPS)
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Moody's downgrades long-term debt of Italy's MCC after Popolare di Bari rescue

11/16/2021 | 06:53am EST

MILAN, Nov 16 (Reuters) - Moody's Investors Service has downgraded the long-term debt of Italian state-owned bank MCC following the rescue of failing rival Banca Popolare di Bari, the credit rating agency said.

MCC was also due to play a role in the rescue of Monte dei Paschi (MPS) by UniCredit before talks fell through and sources have said it could still be involved in MPS's turnaround.

In a statement late on Monday, Moody's said it expected MCC to report a loss in 2021 and 2022 because of the high loan-loss provisions and restructuring charges linked to the acquisition of Popolare di Bari.

Moody's cut MCC's long-term senior unsecured debt rating to 'Ba3' from 'Ba1'. The outlook is now stable.

Popolare di Bari, the biggest bank in Italy's disadvantaged south, was bailed out by peers in a government-backed rescue two years ago, after being laid low by the acquisition of a troubled rival, mismanagement and a deep recession.

A depositor protection fund financed by healthy Italian lenders injected 1.17 billion euros into Popolare di Bari with the Treasury providing another 430 million.

Moody's said that expected losses would significantly erode the bank's core capital buffer going forward.

"The acquisition of Banca Popolare di Bari has fundamentally changed (MCC's) risk profile," the agency said.

"Prior to the acquisition, (it) was a small specialized entity focusing on secured lending backed by public guarantees and it has become a universal bank of a much larger size."

Asked to take on the southern branches of MPS as part of the now collapsed UniCredit deal, MCC put up resistance, saying it could not add more than 110 branches and that it was already struggling with the integration of Popolare di Bari, sources had said.

The Treasury would have recapitalised MCC, two sources had said at the time.

The Treasury is still looking to rid MPS of its unprofitable operations and sources have said the sale of southern branches to MCC is still on the table.

"The merger of two entities that exhibit very different business profiles involves management challenges all the more so since Popolare di Bari's failure revealed numerous shortcomings that (MCC) will have to tackle going forward," Moody's said.

"The new entity will have to outline a new strategy encompassing a wide range of activities, which will also entail significant challenges." (Reporting by Valentina Za; Editing by Nick Macfie)


© Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
BANCA MONTE DEI PASCHI DI SIENA S.P.A. -0.35% 0.905 Delayed Quote.1.82%
BPER BANCA S.P.A. -1.12% 1.904 Delayed Quote.5.21%
UNICREDIT S.P.A. -1.69% 13.36 Delayed Quote.0.19%
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Sales 2021 3 012 M 3 412 M 3 412 M
Net income 2021 340 M 385 M 385 M
Net Debt 2021 - - -
P/E ratio 2021 2,67x
Yield 2021 -
Capitalization 910 M 1 032 M 1 031 M
Capi. / Sales 2021 0,30x
Capi. / Sales 2022 0,31x
Nbr of Employees 21 297
Free-Float -
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