Bloomberg News

UniCredit, Intesa Fall in Milan After S&P Cuts Italy’s Rating

January 16, 2012

Jan. 16 (Bloomberg) -- Italian banks, including UniCredit SpA and Intesa Sanpaolo SpA, fell in Milan trading as Italy’s credit rating downgrade by Standard & Poor’s increased concerns about their funding costs.

UniCredit, Italy’s biggest bank, fell as much as 6.1 percent, and was down 2.2 percent to 2.86 euros at 10:03 a.m., giving the company a market value of 16.5 billion euros ($20.9 billion). Intesa, the country’s second-largest lender, declined 0.3 percent to 1.23 euros.

Italy’s credit rating was cut two levels by S&P to BBB+ on Jan. 13, adding to concerns that Italian banks may struggle to obtain funding. Lenders may need more collateral, according to analysts at Deutsche Bank AG.

“The downgrade on Italy may have an effect on the ratings of Italian banks and consequently on their cost of funding,” Manuela Meroni, a Milan-based analyst at Intesa, wrote in a note today. “Although the access to the ECB’s funding may reduce the impact on banks’ accounts, investors may require a higher return to invest in Italian banks.”

The FTSE Italia All-Share Banks Index fell as much as 3.3 percent. Banca Monte dei Paschi di Siena declined 1.2 percent to 21.7 cents and Banco Popolare SC dropped 1.2 percent to 89.8 cents.

--Editors: Dylan Griffiths, Jon Menon.

To contact the reporter on this story: Sonia Sirletti in Milan at ssirletti@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net


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