...Unipol Banca Drags on Earnings, Capital: The ratings of Unipol Gruppo Finanziario and UnipolSai (together, Unipol) reflect Fitch Ratings' expectations that Unipol's adequate capital and profitability are likely to suffer from the extremely weak credit quality of its banking operations (Unipol Banca) in the coming years. Fitch believes that Unipol's ownership of Unipol Banca will be a drag on its earnings and weaken capital, in view of the likely need to support the banking operations. Strong Capital but Low Quality: Based on end-2015 results, Fitch assesses Unipol's capitalisation as `Strong' using its Prism factor-based capital model (Prism FBM). However, the quality of capital is weakened by the amount of goodwill on the balance sheet and various contingent liabilities, including the bank. The consolidated regulatory Solvency I margin was 168% at end-2015 (end-2014: 169%), but could deteriorate due to Unipol's support of Unipol Banca. The financial leverage ratio (FLR) was high at 33%....
