The ratings on Unione di Banche Italiane Scpa (UBI) reflect its strong northern Italian franchise and sound financial profile, based on satisfactory operating performance and moderate cost of credit risk. Constraining the ratings, however, are potential risks from a large exposure to Italian corporates and significant single-name concentration. UBI is a major Italian banking player, with a 6% national market share and about 4 million clients. UBI notably exhibits a very strong market position in Lombardy, Italy's richest and most populous region, with a 15% market share, No. 2 after Intesa Sanpaolo SpA (AA-/Stable/A-1+). Operating profitability is satisfactory, although one-time integration costs will penalize bottom-line profits in 2007. The bank aims to extract significant synergies from the merger in the
