...Spanish, Italian Banks' Prospects Diverging: The risks for Italian and Spanish medium- sized banks are evolving in opposite directions as the rating actions on their Viability Ratings (VRs) since June 2014 show. The VRs reflect these banks standalone creditworthiness. Capital Improvements Boost Spanish Banks: Fitch Ratings upgraded the VRs of three of the six rated Spanish banks; an Outlook was revised to Positive and a Rating Watch Negative was removed. These rating actions mostly reflected improvements in capital, notably in state- aided banks, asset quality stabilisation signals and good progress in restructuring processes. Italian Banks Still Struggling: Fitch downgraded the VRs of three of the eight rated Italian banks and Negative Outlooks remain dominant. Recently strengthened capital at most Italian banks was not enough to compensate for further deterioration in asset quality and structurally weak profitability in their commercial businesses. Regional Focus: All the banks are centred...
