DBRS Places Intesa’s A (low) Rating URN after Sovereign Rating Action

DBRS Ratings Limited (DBRS) has today placed Intesa SanPaolo SpA’s (ISP or the Bank) Senior Long-Term Debt & Deposits rating at A (low) Under Review with Negative Implications. The rating review includes other liabilities as detailed in the table at the end of the press release. As part of the review process, the Bank’s Intrinsic Assessment (IA) of A (low) will also be reassessed. In parallel, DBRS confirmed the Bank’s Short-Term Debt and Deposits rating of R-1 (low) with Stable trend.

The review of Intesa SanPaolo’s ratings is driven by DBRS’ rating action on the Republic of Italy. On August 5, 2016, DBRS placed the Republic of Italy’s A (low) ratings Under Review with Negative Implications. The Sovereign rating action reflected DBRS’ assessment that the combination of political uncertainty surrounding a forthcoming constitutional referendum and pressure on the banking system, amid a fragile recovery and a less stable external environment, pose downside risks to the ratings.

ISP’s Senior Long-Term Debt & Deposits rating is positioned in line with the Sovereign rating of Italy. Given ISP’s high concentration to the Italian banking market, DBRS considers that the Bank’s prospects are highly correlated with those of the Sovereign. Meanwhile, Intesa SanPaolo’s Senior Long-Term Debt & Deposits rating continues to reflect the strength of the Bank’s leading franchise and diversified business model in Italy, the Bank’s strong management capabilities and controls, as well as the challenges posed by its operating environment.

RATING DRIVERS

Downward pressure to ISP’s ratings would likely be driven by a downgrade of the Sovereign’s rating and/or a material deterioration of the Bank’s financial fundamentals and franchise. Although unlikely, upward rating pressure would require an improvement of the rating for the Italian Sovereign combined with a continuation of the Bank’s strengths.

Notes:
All figures are in EUR unless otherwise noted.

The principal applicable methodology is the Global Methodology for Rating Banks and Banking Organisations (July 2016). Other applicable methodologies include the DBRS Criteria: Support Assessments for Banks and Banking Organisations (March 2016) and DBRS Criteria: Rating Bank Capital Securities – Subordinated, Hybrid, Preferred & Contingent Capital Securities (February 2016) and Critical Obligations Rating Criteria (February 2016). These can be found can be found at: http://www.dbrs.com/about/methodologies

The sources of information used for this rating include company reports, company presentations and SNL Financial. DBRS considers the information available to it for the purposes of providing this rating was of satisfactory quality.

DBRS does not audit the information it receives in connection with the rating process, and it does not and cannot independently verify that information in every instance.

Generally, the conditions that lead to the assignment of a Negative or Positive Trend are resolved within a twelve month period. DBRS’s outlooks and ratings are under regular surveillance

This rating is under review. Generally, the conditions that lead to the assignment of reviews are resolved within a 90 day period. DBRS reviews and ratings are under regular surveillance.

For further information on DBRS historic default rates published by the European Securities and Markets Administration (“ESMA”) in a central repository, see:
http://cerep.esma.europa.eu/cerep-web/statistics/defaults.xhtml.

Ratings assigned by DBRS Ratings Limited are subject to EU regulations only.

Lead Analyst: Nicola De Caro
Rating Committee Chair: Elisabeth Rudman
Initial Rating Date: September 19, 2013
Most Recent Rating Update: December 9, 2015

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