LJUBLJANA (Slovenia), May 19 (SeeNews) – Fitch Ratings said it has downgraded the long-term issuer default ratings (IDRs) of Banka Intesa Sanpaolo, the Slovenian unit of Italian lender Intesa Sanpaolo, following the recent downgrade of its parent.
The Slovenian bank's outlook remains stable, but its short-term IDR has been cut to 'B' from 'F3' and its support rating (SR) to '3' from '2', while the viability rating remains unaffected, Fitch said in a statement on Monday.
The move reflects the reduced ability of Intesa Sanpaolo S.p.A. (ISP, BBB-/Stable/bbb-) to provide extraordinary support to its subsidiary, it explained.
Earlier in May, Fitch cut the ratings of ISP and three other Italian banks following a downgrade of Italy's sovereign rating as a result of the COVID-19 pandemic.
Here is what else the ratings agency said in its statement:
"ISP Slovenia's IDRs and SRs are driven by our view of moderate probability of support from ISP, in case of need. This reflects our view of the bank's strategic importance to ISP, its strong synergies and high level of management and operational integration with the parent. In our assessment of support propensity we also consider the potential high reputational risk to ISP in case of the subsidiary bank's default. While ISP's ability to support is weaker (as reflected in the downgrade of its ratings), we believe any required support would be immaterial relative to its ability to provide it. The Stable Outlook reflects that on the parent.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative rating action/downgrade:
A downgrade of ISP Slovenia's IDR would require both a downgrade of its VR and a downgrade of its parent's Long Term IDR or our view that the parent's propensity to support the bank has weakened (not our base case).
The bank's SR is sensitive to a multi-notch downgrade of ISP's Long-Term IDR.
Factors that could, individually or collectively, lead to positive rating action/upgrade:
ISP Slovenia's IDRs and SR could be upgraded if ISP was upgraded."
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