... di Desio e della Brianza's (BDB) IDRs and Viability Rating (VR) reflect the deterioration of BDB's asset quality and, to a lesser extent, of its capitalisation as a result of the acquisition of Banca Popolare di Spoleto (BPSpoleto) in central Italy. The ratings also reflect BDB's reduced geographic concentration, its unchanged risk appetite after the acquisition and Fitch's expectations that profitability will benefit from cost improvements and cross-selling opportunities. Asset Quality Weakened: BDB's impaired loans increased to a high 13.6% of gross loans at end-9M14, up from a 2012-2013 average of 8%. The acquisition eroded the bank's historical healthier-than-system-average asset quality. Coverage of impaired loans by reserves has improved, which Fitch Ratings views positively, due to BDB's efforts to increase provisions on its own portfolio and the conservative provisioning policy of BPSpoleto. Higher Capital-at-Risk: Unreserved impaired...
