Credito Emiliano S.p.A. — Moody’s upgrades Credito Emiliano S.p.A.’s deposit ratings to Baa2 and assigns Baa3 rating to senior unsecured debt issue

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Rating Action: Moody’s upgrades Credito Emiliano S.p.A.’s deposit ratings to Baa2 and assigns Baa3 rating to senior unsecured debt issueGlobal Credit Research – 13 Jan 2022Outlook remains stableParis, January 13, 2022 — Moody’s Investors Service (Moody’s) has today upgraded Credito Emiliano S.p.A.’s (Credem) long-term deposit ratings to Baa2 from Baa3, the short-term deposit ratings to Prime-2 from Prime-3, and the long-term Counterparty Risk Ratings (CRRs) to Baa1 from Baa2. Moody’s has also assigned a Baa3 long-term rating to Credem’s E600 million senior unsecured debt issue and affirmed the bank’s long-term and short-term Counterparty Risk (CR) assessment of Baa2(cr) and Prime-2(cr). The outlook on Credem’s senior unsecured and long-term deposit ratings is stable.Credem’s Baseline Credit Assessment (BCA) and Adjusted BCA of baa3 are unaffected by today’s rating action.A full list of affected ratings can be found at the end of this press release.RATINGS RATIONALEThe upgrade of the long-term deposit ratings to Baa2 from Baa3 reflects Credem’s standalone BCA of baa3 and the result of Moody’s Advanced Loss Given Failure (LGF) analysis which incorporates the estimated severity of losses faced by the bank’s creditors in a resolution scenario. Owing to the issuance of E600 million of so-called preferred senior unsecured notes, which are subordinated to junior depositors in case of resolution, Credem’s depositors would face a low loss-given-failure. This translates in a one-notch uplift from the bank’s baa3 adjusted BCA. The newly assigned Baa3 senior unsecured debt rating reflects the moderate loss-given-failure under Moody’s LGF analysis, resulting in no uplift from the baa3 Adjusted BCA.Moody’s maintained its assessment of a low probability of government support from the government of Italy (Baa3 stable) for Credem as a medium size bank which translates into no further uplift to the senior unsecured and deposit ratings.RATIONALE FOR THE OUTLOOKThe stable outlook on Credem’s long-term senior unsecured and long-term deposit ratings reflects Moody’s expectation that the bank’s financials will remain broadly stable over the next 12-18 months.FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGSWHAT COULD CHANGE THE RATINGS UPCredem’s senior unsecured and deposit ratings could be upgraded if the bank were to significantly increase its stock of bail-in-able debt.An upgrade of the bank’s BCA is unlikely because it is already aligned with Italy’s sovereign rating (Baa3 stable). Moody’s does not typically rate a bank’s BCA above the sovereign rating.WHAT COULD CHANGE THE RATINGS DOWNCredem’s senior unsecured and deposit ratings could be downgraded following a downgrade of Credem’s BCA. This could be driven by a significant deterioration in the bank’s asset quality and profitability, by a much lower capital base or a significant deterioration in liquidity. Credem’s BCA could also be downgraded if Italy’s sovereign rating were to be downgraded.Credem’s senior unsecured and deposit ratings could also be downgraded following a significant reduction in the bank’s stock of bail-in-able debt.LIST OF AFFECTED RATINGS..Issuer: Credito Emiliano S.p.A.Assignment:….Senior Unsecured Regular Bond/Debenture, Assigned Baa3, Outlook Assigned StableUpgrades:….Long-term Counterparty Risk Ratings, Upgraded to Baa1 from Baa2….Long-term Bank Deposit Ratings, Upgraded to Baa2 from Baa3, Outlook Remains Stable….Short-term Bank Deposit Ratings, Upgraded to P-2 from P-3Affirmations:….Long-term Counterparty Risk Assessment, Affirmed Baa2(cr)….Short-term Counterparty Risk Assessment, Affirmed P-2(cr)….Short-term Counterparty Risk Ratings, Affirmed P-2….Junior Senior Unsecured Regular Bond/Debenture, Affirmed Ba1 Outlook Action: ….Outlook, Remains Stable PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Banks Methodology published in July 2021 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1269625. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.REGULATORY DISCLOSURESFor further specification of Moody’s key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody’s Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody’s rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider’s credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.These ratings are solicited. Please refer to Moody’s Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.Moody’s general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1288235.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody’s affiliates outside the UK and is endorsed by Moody’s Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody’s office that issued the credit rating is available on www.moodys.com.Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody’s legal entity that has issued the rating.Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating. Fabio Ianno VP – Senior Credit Officer Financial Institutions Group Moody’s France SAS 96 Boulevard Haussmann Paris 75008 France JOURNALISTS: 44 20 7772 5456 Client Service: 44 20 7772 5454 Alain Laurin Associate Managing Director Financial Institutions Group JOURNALISTS: 44 20 7772 5456 Client Service: 44 20 7772 5454 Releasing Office: Moody’s France SAS 96 Boulevard Haussmann Paris 75008 France JOURNALISTS: 44 20 7772 5456 Client Service: 44 20 7772 5454 © 2022 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.CREDIT RATINGS ISSUED BY MOODY’S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. 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