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Moody's downgrades BNP Paribas' Italian unit

Moody's on Oct. 4 downgraded Banca Nazionale del Lavoro SpA's long-term deposit rating to Baa1 from A3, with a negative outlook.

Also downgraded were the BNP Paribas SA unit's long-term senior unsecured debt and issuer ratings to Baa3 from Baa2, while the outlook on the ratings was revised to negative from stable.

Moody's said the ratings downgrade reflects the Italian lender's reducing stock of bail-in-able debt, which results in higher loss-given-failure for its junior deposits and senior unsecured bonds. The negative outlook, meanwhile, reflects the likelihood of capital deterioration in response to a significant increase in provisions, for example if required by the supervisory authority or initiated by the bank, without a compensating equity increase.

Concurrently, the agency affirmed the bank's "ba2" baseline credit assessment, its "baa2" adjusted baseline credit assessment, its Prime-2 short-term deposit ratings and its Baa1(cr)/Prime-2(cr) long-term and short-term counterparty risk assessments.