...Coronavirus Fallout Drives RWN: The Rating Watch Negative (RWN) on BPER Banca S.p.A.'s (BPER) ratings reflects the short-term downside risk given the economic disruption in Italy following the coronavirus outbreak. The bank entered the economic downturn from a position of relative weakness given its still weaker-than-average asset quality, high capital encumbrance from unreserved impaired loans and weak profitability. Second-Tier Domestic Franchise: BPER's ratings reflect its sound second-tier multi-regional domestic franchise, stable funding and liquidity profile as well as pressure on operating profitability. They also factor in recent progress in reducing non-performing loans (NPLs), which has resulted in a reduction of capital encumbrance from unreserved NPLs. Still Weak Asset Quality: The decrease in the impaired loans ratio to 11.2% at end-March 2020 from 13.9% at end-2018 was driven by the disposal of about gross EUR1.2 billion of impaired loans and the consolidation of Unipol Banca,...
