Moody's on May 28 upgraded the long-term deposit ratings of Italy-based Banco BPM SpA to Baa3 from Ba1, with the outlook remaining stable.

The ratings agency also upgraded the bank's short-term deposit ratings to P-3 from Not Prime, its baseline and adjusted baseline credit assessments to "ba3" from "b1," long-and short-term counterparty risk assessments to Baa3(cr)/P-3(cr) from Ba1(cr)/Not Prime(cr) and long-and short-term counterparty risk ratings to Baa3/P-3 from Ba1/Not Prime.

Moody's said the upgrade of the bank's baseline credit assessment reflects the lender's improved asset quality. The upgrade prompted the similar action on the bank's long-term deposit and counterparty risk ratings.

The stable outlook reflects the agency's expectations that the lender's financial profile will remain unchanged for the next 12 to 18 months, with a more gradual reduction in stable capital, problem loans and modest profitability.

Moody's, meanwhile, affirmed Banco BPM's long-term issuer and senior unsecured debt ratings at Ba2, with the outlook remaining negative.