...Support-Based IDR: Banca Popolare dell'Emilia Romagna's (BPER) Long-Term IDR is based on the moderate probability of support available from the Italian authorities, reflected in the bank's `BB+' Support Rating Floor (SRF). The `bb' Viability Rating (VR) reflects the bank's high level of impaired loans, the significance of their net value in relation to capital and weak profitability. Weak Asset Quality: The level of impaired loans is one of the highest among peers, accounting for almost 20% of gross loans. This is the combined result of past acquisitions of banks with diverse credit risk qualities, the domestic recession but also not-so-stringent underwriting standards in past years. The coverage of impaired loans is acceptable at 46% and in line with peers. Fitch expects BPER's level of impaired loans to continue to grow in 2H14. Credit Risk Erodes Capital: Fitch considers the EUR750m capital strengthening completed in July 2014 not sufficient to compensate for the strong deterioration...
