In our view, economic prospects in Italy are likely to be weaker than we had previously anticipated and weak overall in the next couple of years. We believe this will likely continue to dampen Italian banks' asset quality and profitability, and, specifically, lead to high credit losses in the Italian banking system over the next two years significantly exceeding our previous expectations. We nevertheless expect Unione di Banche Italiane (UBI) to be able to cushion the impact on its solvency position of the higher credit losses we anticipate. We are therefore affirming our 'BBB-/A-3' long- and short-term counterparty credit ratings on UBI. The negative outlook reflects the possibility that we could lower the ratings if we anticipate that UBI's capital
