Fitch: the fund Atlas risks weakening the big banks – Il Sole 24 Ore

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This article was published April 13, 2016 at 15:19.
the last change is the April 13, 2016 at 15:29.

The major Italian banks are exposed to considerable risk, as they are constantly called to give support to efforts of the Government to support the weaker institutions and maintain financial stability. This is the opinion of Fitch in the wake of the Atlas fund. Intesa Sanpaolo, Unicredit and other medium to large banks “have been encouraged by the Government to intervene in the financing of the new bailout fund,” write the analysts of rating agencies. Once the fund will be in operation probably it will detect a commitment Unicredit on the capital of Popolare di Vicenza. This “is good news for Unicredit ‘, but will drag Intesa Sanpaolo and other banks to finance an investment that would normally be out of their risk parameters.

Also recalling the intervention in October in the “resolution” of the four regional banks, Fitch believes that “the financial profile of the big banks will weaken and the ratings could come under pressure if they are constantly called to give support to emergency to the banking sector. ” The establishment of Atlas also could present execution risks. You may need the green light of the EU Commission and the proposal that the CDP participates in the fund could end up under examination as state aid.

In outlining the potential risks they are exposed to large Italian banks are increasingly called upon to rescue distressed institutions, Fitch notes that Intesa Sanpaolo and Unicredit will inject € 1 billion each in Atlas and that all banks Italian – except for those with problems of capital or liquidity pressures – will participate, as well as insurance companies, banking foundations and asset management companies.

The demands made on Intesa, Unicredit and Ubi have been growing in recent months, said the agency, noting that the contributions to the resolution of the four banks to October totaled 900 million euro. This costs Intesa and Unicredit around 10-11% of income before taxes in 2015-and Ubi as 30 percent. Banks also increased liquidity facilities to resolution fund and will have to provide at least 100 million euro of compensation to subordinated bondholders who suffered losses during the resolution. Intesa, UniCredit and Ubi Banca – reminds Fitch – all three have a rating of “BBB” range that indicates a good quality of credit fundamentals, good prospects for activity and a moderate degree of financial strength. However, the agency has reviewed negatively on 24 March, the outlook of Unicredit and Ubi, to take into account the weaknesses in asset quality and pressures on capital, particularly in view of the high levels of non-performing loans without coverage. To a lesser extent there are also risks for Intesa Sanpaolo, which has a stable outlook, but with a potential upside limited. The ratings of the three banks – writes Fitch – could be lowered if not accelerate the measures to dispose of the bulk of NPL and capital remains very exposed to Npl not covered by reserves. (Il Sole 24 Ore Thomson Plus)

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