...Moderate Rating Headroom: The Rating Watch Negative (RWN) reflects the near-term risk to Unicaja Banco S.A's (Unicaja) ratings arising from the coronavirus outbreak. Unicaja's asset quality is somewhat weaker than some domestic peers', and its business model is less diversified than larger domestic banks'. This means it has only moderate rating headroom to face the economic disruption posed by the outbreak. The ratings of Unicaja reflect its sound but concentrated regional franchise, capital ratios with satisfactory buffers over regulatory minimums, a large, stable and granular customer deposit base and ample liquidity. Recent Asset Quality Clean-Up: Unicaja has made good progress in reducing its stock of problem assets (impaired loans and net foreclosed assets) in the past two years, helped by improved recoveries, write-offs and asset sales. At end-March 2020, its problem-asset ratio was, however, still above the EU average at 6.3%, while the coverage ratio was good at 59%. Impaired Loans...
