Press Release

Morningstar DBRS Changes the Trend on Banco BPM SpA's Long-Term Deposits to Positive Following Sovereign Rating Action

Banking Organizations
November 04, 2024

DBRS Ratings GmbH (Morningstar DBRS) changed the trend on the Long-Term Deposits of Banco BPM SpA (BBPM or the Bank) to Positive from Stable. At the same time, Morningstar DBRS confirmed the credit ratings on the Bank's Long-Term Deposits and Short-Term Deposits at BBB (high) and R-1 (low), respectively. BBPM's Issuer Ratings and Intrinsic Assessment (IA) are unaffected by this credit rating action. A full list of credit rating actions is included at the end of this press release.

KEY CREDIT RATING CONSIDERATIONS
The trend change to Positive from Stable on the Bank's Long-Term Deposits follows Morningstar DBRS' credit rating action on the Republic of Italy (Italy). On 25 October 2024, Morningstar DBRS confirmed Italy's Long-Term Foreign and Local Currency - Issuer Ratings at BBB (high) and changed the trends on those ratings to Positive from Stable. (For more details on the rationale for the sovereign credit rating action, please refer to the press release "Morningstar DBRS Changes Trends on Republic of Italy to Positive, Confirms Ratings at BBB (high)" https://dbrs.morningstar.com/research/441770/).

Morningstar DBRS rates deposits in Italy one notch above the Bank's IA, up to the same credit rating level as the Italian sovereign. This reflects the legal framework in place in Italy, which has full depositor preference in bank insolvency and resolution proceedings. As a result, the Bank's Long-Term Deposits are rated BBB (high); however, the trend has been changed to Positive from Stable, in line with the trend change on the sovereign credit rating.

CREDIT RATING DRIVERS
BBPM's Long-Term and Short-Term Deposit credit ratings will generally be affected by changes in the Bank's IA. However, an upgrade of the Long-Term Deposits would also require an upgrade of Italy's sovereign credit rating. The trend on the Bank's Long-Term Deposits would be changed to Stable if the trend on the Italian sovereign were changed to Stable.

In addition, the deposit credit ratings could also be affected by any further changes in the legal framework for bank resolution and/or creditor hierarchy.

An upgrade of the IA would require from BBPM further demonstration of improved profitability, a continued commitment to improve asset quality, and a solid capital position.

Given the Positive trend on the Bank's Long-Term Issuer Rating, a downgrade of the IA is unlikely at this time. However, the trend could be changed to Stable in the event of a significant deterioration in the Bank's asset quality and/or a sustained weakening of its underlying profitability.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factors that had a significant or relevant effect on the credit analysis.

A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (13 August 2024) https://dbrs.morningstar.com/research/437781.

Notes:
All figures are in euros unless otherwise noted.

The principal methodology is the Global Methodology for Rating Banks and Banking Organisations (4 June 2024) https://dbrs.morningstar.com/research/433881. In addition, Morningstar DBRS uses the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings https://dbrs.morningstar.com/research/437781 in its consideration of ESG factors.

The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies

The sources of information used for this credit rating include Morningstar, Inc. and company documents, BBPM H1 2024 Results Press Release, BBPM H1 2024 Results Presentation, BBPM H1 2024 Report. Morningstar DBRS considers the information available to it for the purposes of providing this credit rating to be of satisfactory quality.

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

The conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. Morningstar DBRS' outlooks and credit ratings are under regular surveillance.

For further information on Morningstar DBRS historical default rates published by the European Securities and Markets Authority (ESMA) in a central repository, see: https://registers.esma.europa.eu/cerep-publication. For further information on Morningstar DBRS historical default rates published by the Financial Conduct Authority (FCA) in a central repository, see https://data.fca.org.uk/#/ceres/craStats.

The sensitivity analysis of the relevant key credit rating assumptions can be found at: https://www.dbrsmorningstar.com/research/442509.

This credit rating is endorsed by DBRS Ratings Limited for use in the United Kingdom.

Lead Analyst: Nicola De Caro, Senior Vice President, Sector Lead - European Financial Institution Ratings
Rating Committee Chair: Marcos Alvarez, Managing Director - Global Financial Institution Ratings
Initial Rating Date: 5 January 2017
Last Rating Date: 18 April 2024

DBRS Ratings GmbH
Neue Mainzer Straße 75
60311 Frankfurt am Main Deutschland
Tel. +49 (69) 8088 3500
Geschäftsführer: Detlef Scholz
Amtsgericht Frankfurt am Main, HRB 110259

For more information on this credit or on this industry, visit https://dbrs.morningstar.com.

Ratings

  • US = Lead Analyst based in USA
  • CA = Lead Analyst based in Canada
  • EU = Lead Analyst based in EU
  • UK = Lead Analyst based in UK
  • E = EU endorsed
  • U = UK endorsed
  • Unsolicited Participating With Access
  • Unsolicited Participating Without Access
  • Unsolicited Non-participating

ALL MORNINGSTAR DBRS RATINGS ARE SUBJECT TO DISCLAIMERS AND CERTAIN LIMITATIONS. PLEASE READ THESE DISCLAIMERS AND LIMITATIONS AND ADDITIONAL INFORMATION REGARDING MORNINGSTAR DBRS RATINGS, INCLUDING DEFINITIONS, POLICIES, RATING SCALES AND METHODOLOGIES.