The ratings on Italy-based UniCredit SpA balance our expectation of a weaker credit and financial performance with our view of the bank's adequate capital; high business and earnings diversification; and its strong franchise in Italy, the German State of Bavaria, Austria, Poland, and few other countries in Central and Eastern Europe (CEE). In our opinion, UniCredit's balance sheet is still vulnerable to the currently difficult economic and operating environment, given its combined presence in Western Europe, CEE, and the Commonwealth of Independent States countries (CIS). The prospects for a feeble recovery in Western Europe in 2010 and 2011 after deeply deteriorated economic conditions in 2008 and 2009, and ongoing significant economic uncertainties in CIS and CEE countries are likely to
