Moody's on Dec. 13 affirmed Banca Carige SpA's B3 long-term bank deposit rating and Caa2 long-term issuer rating and revised the outlook on both ratings to negative and stable, respectively, from developing.
The rating agency also upgraded the Italian bank's baseline and adjusted baseline credit assessments to "caa1" from "ca" and its long-term counterparty risk assessment to B1(cr) from B3(cr).
Banca Carige's Not Prime short-term deposit rating and Not Prime(cr) short-term counterparty risk assessment were unaffected.
The ratings actions reflect the lender's recapitalization and planned problem loan reduction, higher loss given failure for the bank's junior deposits and senior unsecured bonds and Moody's revised view of low probability of government support.
The negative outlook on the long-term deposit rating reflects the agency's expectation of a decrease in Banca Carige's bail-in-able debt as retail senior unsecured bonds mature in 2018, which could increase the loss given failure of junior deposits in the absence of new issuance, according to Moody's.
The stable outlook on the long-term issuer rating reflects Moody's view that a return to adequate profitability will be steady and that the Italian lender's financials will remain compatible with its current baseline credit assessment over the next 12 months to 18 months.