S&P lowers rating on 34 Italian banks
Baku, February 11 (AZERTAC). Standard & Poor's Ratings Services lowered its ratings on 34 Italian banks, citing concerns over Italy's financial vulnerability and expectations for weak profits at the banks.
Among the banks downgraded were some of Italy's largest, including UniCredit SpA, Intesa Sanpaolo SpA and Banca Monte dei Paschi di Siena SpA.
The banking-sector downgrades came after S&P downgraded its credit rating on Italy's government debt by two notches last month.
"In our view, Italy's vulnerability to external financing risks has increased, given its high external public debt, resulting in Italian banks' significantly diminished ability to roll over their wholesale debt," S&P said in a statement.
S&P downgraded the credit ratings of a nine countries that use the euro in January, including bumping Italy's credit rating down two notches. Debt ratings can play a significant role in determining countries' borrowing costs by forcing them to pay higher interest rates to compensate borrowers for taking on added risk.
However, Fitch Ratings followed suit in two weeks with a special warning for Italy that it could face permanently higher borrowing costs that would make it harder to keep its debt under control. It resisted stronger ratings action because of the "strong commitment" of the new Italian government to balance the country's budget and make Italy a better place to do business.
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