S&P downgrades 7 Italian banks
ROME (AP) — Standard & Poor's said Wednesday that it had downgraded seven Italian banks because of sovereign debt risk, a day after the agency downgraded Italy's credit rating.
The cut targeted leading banks Mediobanca SpA and Intesa Sanpaolo SpA, as well as Findomestic Banca SpA, Banca IMI SpA, Banca Nazionale del Lavoro SpA, Banca Infrastrutture Innovazione e Sviluppo SpA and Cassa di Risparmio in Bologna SpA.
The agency said it was assigning negative outlooks to the long-term ratings on these seven banks. It was also revising its outlooks from stable to negative on eight other Italian banks, including Unicredit.
"The negative outlooks on the long-term ratings on the 15 banks reflect the possibility that we could lower their ratings, all other things being equal, should we further lower our ratings on the Republic of Italy," S&P said in a statement.
This week, S&P downgraded Italian sovereign bonds to A from A+ — reinforcing fears that Italy, with the second-highest debt burden in the eurozone after Greece, is getting drawn into Europe's debt crisis.
The agency cited weaker growth prospects and a fragile governing coalition as key reasons for its surprisingly swift downgrade, just four months after issuing a warning. The Italian government of Prime Minister Silvio Berlusconi has criticized the downgrade as politically motivated.
In a statement released Wednesday about the banks' downgrade, S&P said it was acting "in accordance with our criteria applicable to the relationship between the ratings on financial institutions and their related sovereign in the European Economic & Monetary Union."
It said it was "lowering our long-term ratings on seven Italian banks and assigning negative outlooks to the long-term ratings on these banks."
Italy has passed an austerity package and promised to balance the budget by 2013, but only after several revisions and amid bickering within Berlusconi's ruling coalition. The package has been criticized by the opposition and by Italy's largest union, which staged a strike earlier this month.
Berlusconi himself has been weakened by a sex scandal and three other legal cases in Milan.
The premier has resisted calls to step down — the latest one coming Wednesday from the pages of Italy's main business daily. The call by Il Sole 24 Ore, the newspaper of the country's top industrialists' lobby, indicates an erosion of support among business leaders for Berlusconi.
The newspaper wrote that the "fragility" of Berlusconi's government had put Italy at risk.