With Italy facing a potentially deeper and more prolonged recession than we had originally anticipated, we are of the view that the vulnerability of Italian banks to the impact of rising loan losses has increased due to the combined effect of mounting problem assets and reduced coverage of loan loss reserves. That said, we believe that Italy-based Istituto Centrale delle Banche Popolari Italiane (ICBPI) is likely to be only marginally affected by the negative impact of what we see as increased credit risk in the Italian economy, given that it is a niche player in payment and credit card-related services. We are therefore affirming our 'BBB-/A-3' long- and short-term counterparty credit ratings on ICBPI and its core subsidiary, CartaSi SpA
