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Fitch downgrades Banca Carige, says failure is 'real possibility'

Fitch Ratings on Oct. 10 downgraded Banca Carige SpA's long- and short-term issuer default ratings to CCC+/C from B-/B and placed the long-term rating on Rating Watch Negative.

The rating agency also downgraded the Italian bank's viability rating to "ccc+" from "b-" and placed it on Rating Watch Negative as well. The lender's support rating and support rating floor were affirmed at 5 and No Floor, respectively.

Fitch noted the downgrade reflects its view that Banca Carige's failure is a real possibility due to the challenges it faces in strengthening its capital that could ultimately result in regulatory intervention. The risk to the bank's viability has also increased as it does not meet its Pillar 2 total capital requirement, the agency added. The ratings also reflect the latest change in the bank's management.

The Rating Watch Negative is based on Fitch's view that failure to complete the capital strengthening by the end of 2018 would increase the risk of a regulatory intervention and hence of losses being imposed on senior creditors.