NEW YORK, February 15 (FinanceEnquiry.com) - Standard & Poor’s Rating Services updated its Banking Industry Country Risk Assessment (BICRA) from group3 to group 4 on the Republic of Italy.  Moreover, it also revised the economic risk and industry risk scores of two components of BICRA from 3 to 4.
 
In a research note published on February 10, S&P Rating Services revised its BICRA that has caused severe negative rating actions for the various Italian banks under coverage. Moreover, S&P downgraded unsolicited long and short-term sovereign credit ratings on the Republic of Italy from ‘A/A-1’  to ‘BBB+/A-2’, while affirming negative outlook and removal from CreditWatch negative. S&P sees that Italy’s exposure to external financing risks has elevated, in light of increased external public debt leading to weakening ability of Italian banks to roll over their wholesale debt. In the coming years, continued weak profitability is expected for Italian banks, and risk-adjusted on core banking products might lack in fulfilling their cost of capital. Consequently, this might negatively impact the Italian banking industry’s stability.