Strong franchise in Italy, Germany, Austria, and Central and Eastern Europe (CEE). High level of business and geographic diversification. Sound and well-balanced funding base. Significant business and credit exposure in higher economic risk countries than international peers. Still modest, although improving, profitability. Large, although declining, stock of problematic assets. The negative outlook on UniCredit SpA mirrors that on Italy. It primarily reflects that we could downgrade UniCredit over the next 12-24 months if we downgrade Italy and conclude that UniCredit would be unlikely to withstand a sovereign default without defaulting. In our base-case scenario for UniCredit, we anticipate that the bank will be able to reduce its stock of NPEs below 8% by 2019. We expect it will post risk-adjusted
