Summary: UBI Banca SpA

Strong franchise and market position in Italy. Prudent business strategy. Better asset quality than the peer average. Still-limited capitalization by our measure. High cost base compared to peers. Coverage of nonperforming credit lower than the system average, although this is improving. Our outlook on Italy-based UBI Banca SpA is stable. This reflects our expectation that the bank will be able to reach a risk-adjusted capital (RAC) ratio before adjustments of 5.0%-5.5% over the next two years. It also reflects our view that UBI's nonperforming loans (NPL) ratio will decline while remaining below the domestic average over our outlook horizon. Although unlikely at this stage, we could raise the long-term rating on UBI if its NPL coverage converged more closely with

...Outlook: Stable Our outlook on Italy-based UBI Banca SpA is stable. This reflects our expectation that the bank will be able to reach a risk-adjusted capital (RAC) ratio before adjustments of 5.0%-5.5% over the next two years. It also reflects our view that UBI's nonperforming loans (NPL) ratio will decline while remaining below the domestic average over our outlook horizon. Although unlikely at this stage, we could raise the long-term rating on UBI if its NPL coverage converged more closely with the Italian banking sector average and we raised the unsolicited long-term sovereign credit rating on Italy. If UBI's stand-alone credit profile were to strengthen, we would not consider rating it above Italy because the bank's activity remains concentrated there. We would downgrade UBI following a similar action on Italy. Alternatively, we could lower the ratings on UBI if we saw its combined capital and risk profile worsening. Although we cannot rule out further consolidation in the Italian banking...

Summary