DBRS on Dec. 13 lowered Banca Monte dei Paschi di Siena SpA's senior long-term debt and deposit rating to B (low) from B (high) and its short-term debt and deposit rating to R-5 from R-4.
DBRS also changed its review of the ratings to developing from negative implications, reflecting its view that the ratings may be downgraded, confirmed or upgraded depending on the progress of Monte dei Paschi's planned recapitalization.
The lender's long- and short-term critical obligations ratings remain at BBB (low)/R-2 (middle), and are still under review with negative implications. The bank's intrinsic assessment was lowered to B (low).
The downgrade reflects increased execution risk for the bank's recapitalization and growing investor concerns over Italy's political stability following a No vote in the nation's referendum on constitutional reform.
The agency said it still does not see a bail-in of Monte dei Paschi senior debt as the likeliest outcome but said the increased likelihood that the bank may have to resort to state aid was a key driver of the downgrade to B (low).