DBRS Morningstar Revises Trend on UBI’s Deposit Ratings to Negative after Sovereign Rating Action

DBRS Ratings GmbH (DBRS Morningstar) revised the Trend on Unione di Banche Italiane SpA’s (UBI or the Bank) BBB (high) Long-Term Deposit rating and on the R-1 (low) Short-Term Deposit rating to Negative from Stable. UBI’s Issuer Ratings and Intrinsic Assessment (IA) are unaffected by this rating action. A full list of rating actions is included at the end of this press release.

KEY RATING CONSIDERATIONS

Today’s rating action is driven by DBRS Morningstar’s rating action on the Italian Sovereign Rating. On May 8, 2020, DBRS Morningstar confirmed the Republic of Italy’s ratings at BBB (high)/R-1 (low) and revised the Trend to Negative from Stable (DBRS Morningstar Confirms Republic of Italy at BBB (high), Trend changed to Negative). DBRS Morningstar rates deposits in Italy one notch above the bank’s IA, up to the same 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 UBI’s Long-Term Deposit rating is BBB (high), however the Trend has been changed to Negative, in line with the Trend on the sovereign rating.

RATING DRIVERS

The Long-Term and Short-Term Deposit ratings of UBI will generally be affected by changes in the Bank’s IA. However the trend could revert to Stable if the Trend on the Italian Sovereign improves. A downgrade could result from a downgrade of Italy’s Sovereign rating.

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

ESG CONSIDERATIONS

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework and its methodologies can be found at: https://www.dbrsmorningstar.com/research/357792.

Notes:
All figures are in EUR unless otherwise noted.

The principal methodology is the Global Methodology for Rating Banks and Banking Organisations (11 June 2019). - https://www.dbrsmorningstar.com/research/346375/global-methodology-for-rating-banks-and-banking-organisations

For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/357883

The sources of information used for this rating include UBI Q1 2020 Results Press Release, UBI Q1 2020 Results Presentation, UBI Annual Reports, and S&P Global Market Intelligence. DBRS Morningstar considers the information available to it for the purposes of providing this rating to be of satisfactory quality.

DBRS Morningstar 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 12-month period. DBRS Morningstar's outlooks and ratings are under regular surveillance.

For further information on DBRS Morningstar 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.

The sensitivity analysis of the relevant key rating assumptions can be found at: https://www.dbrsmorningstar.com/research/360900

Ratings assigned by DBRS Ratings GmbH are subject to EU and U.S. regulations only.

Lead Analyst: Nicola De Caro, Senior Vice President - Global FIG
Rating Committee Chair: Ross Abercromby, Managing Director - Global FIG
Initial Rating Date: November 25, 2015
Last Rating Date: April 2, 2020

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