Fitch warns of risk for Italy's lenders
Ahead of this month's updates to Italy's grade by major peers, Fitch Ratings said on Friday that capital erosion is weighing on the country's banks as bond prices drop and borrowing costs rise. Highlighting "macroeconomic uncertainty," the agency cautioned that lenders are exposed to bonds issued by the government in Rome.
It noted the outlook to sovereign rating BBB was revised to negative in August upon the formation of the new government, which indicated it would boost expenditure. Banca Nazionale del Lavoro (BBB+), Credito Emiliano, Intesa Sanpaolo, Mediobanca and UniCredit (all BBB), and Unipol Banca (BB+) were then also given negative assessments.
As the spread or risk premium between yields on Italy's 10-year bonds and the German benchmark surged past three percentage points, "some banks are likely to have experienced a meaningful decline in capital," the report added. "However, we believe refinancing risk for the largest and higher-rated Italian banks is limited," the credit appraiser said.