The ratings on Italy-based banking group UniCredito Italiano SpA (UniCredito) reflect its strong business and geographic diversification in the group's core markets of Italy, Germany, and Austria; a strategic presence in fast-growing countries in Central and Eastern Europe (CEE); and expected tight integration of German banking group Bayerische Hypo- und Vereinsbank AG (HVB; A/Negative/A-1). On the other hand, the ratings are constrained by the dilution of UniCredito's consolidated profitability and capital resulting from the purchase of HVB, exposure to the weak German property market, and execution risk linked to the acquisition. UniCredito boasts strong market shares in wealthy northern Italy, the German State of Bavaria, and Austria. Moreover, the group has the largest presence of any bank in several CEE
