The ratings on Italy-based UniCredito Italiano SpA (UniCredito) reflect the banking group's strong business and geographic diversification in its core markets of Italy, Germany, and Austria; strategic presence in fast-growing economies in Central and Eastern Europe (CEE); strong management and clear strategy; and satisfactory profitability from the Italian and CEE businesses. On the other hand, the ratings are constrained by structurally weaker asset quality than peers'; the low profitability of the German and Austrian operations; a temporary weakening of consolidated capital ratios after the acquisition of Bayerische Hypo- und Vereinsbank AG (HVB; A/Stable/A-1); and high execution risk in creating a European banking group operating in a variety of regulatory and economic contexts. The integration of HVB's operations is set to
