DBRS Downgrades BMPS’ State Guaranteed Notes to BBB (high) after Sovereign Rating Action

DBRS Ratings Limited (DBRS) has today lowered Banca Monte dei Paschi di Siena SpA’s (BMPS or the Bank) EUR 4 billion (3.50% 20.03.2017 – ISIN: IT0004804362) Notes (the Notes) guaranteed by the Italian Ministry of Economy and Finance (the Guarantor) to BBB (high) with a Stable trend from A (low) Under Review with Negative Implications. Today’s rating action follows DBRS’ downgrade of Italy’s Sovereign rating to BBB (high) from A (low). For more details on the rationale for the Sovereign downgrade, refer to the press release <a href="http://dbrs.com/research/304610/dbrs-downgrades-italy-to-bbb-high-stable-trend.html" target="_blank">“DBRS Downgrades Italy to BBB (high), Stable Trend - January 13, 2017”</a>.

The Notes, which are unconditionally and irrevocably guaranteed by the Italian Ministry of Economy and Finance, were issued on March 20, 2012 and will mature on March 20, 2017.

DBRS’ ratings of B (low) / R-5 for BMPS’ Senior Long-Term Debt & Deposit and Short-Term Debt & Deposits remain Under Review with Developing Implications. DBRS’ rating review, which was initiated on December 13, 2016 due to uncertainties remaining with the Bank’s recapitalization plan, is expected to be completed by March 2017. During the review period, DBRS will continue to monitor the Bank’s recapitalization plan and liquidity position following the formal request for State Aid on December 23, 2016. For more details on BMPS’ recent developments, refer to DBRS commentary <a href="http://dbrs.com/research/304265/dbrs-comments-on-recent-developments-in-bmps-recapitalisation.pdf?v=1484931495057" target="_blank">“DBRS Comments on Recent Developments in BMPS’ Recapitalisation - December 29, 2016”</a>.

RATING DRIVERS
Upward rating action on the rating for BMPS’s State Guaranteed Notes would require an improvement of the rating for the Italian sovereign. Conversely, downward pressure would be driven by a downgrade of the Sovereign’s rating.

Notes:
All figures are in Euros 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), DBRS Criteria: Rating Bank Capital Securities – Subordinated, Hybrid, Preferred & Contingent Capital Securities (February 2016), Critical Obligations Rating Criteria (February 2016) and DBRS Criteria: Guarantees and Other Forms of Support (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 documents and SNL Financial. DBRS considers the information available to it for the purposes of providing this rating to be 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

For further information on DBRS historical default rates published by the European Securities and Markets Authority (“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, Vice President – Global FIG
Rating Committee Chair: Elisabeth Rudman, Managing Director, Head of EU FIG - Global FIG
Initial Rating Date: January 18, 2013
Most Recent Rating Update: December 13, 2016

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