The ratings on Italy-based UniCredit SpA reflect a balancing of Standard&Poor's Ratings Services' expectation of a weaker credit and financial performance with our view of the bank's high business and earnings diversification and its strong franchise in Italy, the German State of Bavaria, the Republic of Austria, and countries in Central and Eastern Europe (CEE). In our opinion, UniCredit is vulnerable to the current difficult economic and operating environment, due to its rapid expansion in the past few years both in Western Europe and in CEE and Commonwealth of Independent States (CIS) countries, which has increased its risk profile. The deteriorated economic prospects in the areas where the bank operates should weaken UniCredit's balance sheet through materially higher
