TEXT-Fitch affirms ICCREA Holding at 'BBB+', outlook is negative

Mon Feb 4, 2013 12:16pm EST

Feb 4 - Fitch Ratings has affirmed ICCREA Holding's Long-term Issuer Default
Rating (IDR) at 'BBB+' with a Negative Outlook, Viability Rating (VR) at 'bbb+',
Short-term IDR at 'F2', Support Rating at '2' and Support Rating Floor (SRF) at
'BBB'. At the same time, the agency has affirmed ICCREA Holding's two main
subsidiaries, Iccrea Banca and Iccrea Banca Impresa (IBImpresa). A full list of
rating actions is at the end of this rating action commentary.

RATING ACTION RATIONALE
The affirmations reflect the group's key role within the Italian mutual banking
sector, for which it acts as the largest central institution. This means that,
in Fitch's opinion, ICCREA Holding and its main subsidiaries benefit from
ordinary support from the member banks of the mutual banking sector. This
includes the benefits for ICCREA from the sector's strong franchise, but also
from access to funding and capital from the sector's banks.

The affirmation also takes into account deteriorating asset quality at the bank,
offset somewhat by improved capitalisation and sound liquidity. Liquidity is
held up by the Italian mutual banks that place their excess liquidity with
Iccrea Banca.

RATING DRIVERS AND SENSITIVITIES - IDRS, VR AND SENIOR DEBT
As the Long-term IDRs assigned to ICCREA Holding, Iccrea Banca and IBImpresa are
based on ICCREA Holding's VR, a downgrade of the VR would result in a downgrade
of the Long-term IDRs of all three entities.

Iccrea group's strategy is to increase its role of providing products and
services to the Italian mutual banks through IBImpresa, which provides corporate
loans to clients of the sector and Iccrea Banca, which primarily acts as the
sector's main central institution. ICCREA Holding's ratings are based on its
instrumental role in the sector, and any weakening of its importance, which
Fitch does not expect, would put pressure on ratings.

Profitability has suffered from high loan impairment charges reflecting mainly
troubled corporate loans, including a high proportion of leasing assets. Gross
impaired loans reached 14% of gross loans at end-June 2012, and loan impairment
allowance coverage of 31% is low and below that of peers. Coverage relies on the
value of collateral, often real estate related. Fitch expects the bank to
increase the loan impairment allowance coverage of impaired loans, but that this
increase will be manageable for the bank and not result in an erosion of
capitalisation. However, a further increase in new impaired loans would place
pressure on ratings given the bank's only adequate capitalisation. Any upward
pressure on the ratings would require a material improvement in asset quality,
which Fitch considers unlikely in the near term.

Funding and liquidity at the group benefit from Iccrea Banca's role as a large
intermediary for the mutual banking sector's liquidity. Iccrea Banca also acts
as an intermediary for the sector's banks to access ECB funding, which resulted
in Iccrea Banca receiving EUR12.6bn in long-term funding from the central bank,
of which it passed on EUR11.6bn, which was raised on behalf of sector banks, to
the sector banks. Fitch considers the bank's liquidity sound, but any weakening
would put pressure on ratings.

Capitalisation improved after a capital increase in Q411, and ICCREA Holding had
a FCC/RWA ratio of 8.8% at end-June 2012. Fitch considers this ratio only just
adequate given deteriorated asset quality, but the group's shareholders, which
consist of the mutual banking sector banks, have shown their willingness to date
to participate in capital increases, and Fitch expects that they would provide
additional capital if needed.

The IDRs of ICCREA Holding's main subsidiary banks are equalised and are driven
by the group's VR, which is based on an assessment of the consolidated group.
This reflects Fitch's view that capital and funding within the Iccrea group are
fungible, and changes to the IDR would affect all rated group entities.

RATING DRIVERS AND SENSITIVITIES - SUPPORT RATING AND SUPPORT RATING FLOOR
ICCREA Holding's Support Rating and SRF reflect Fitch's view that there is a
high probability that ICCREA Holding would receive support from the Italian
authorities if needed. The agency believes that the mutual banking sector, which
has an aggregate market share of about 7% of loans in Italy, is of systemic
importance, and that support for ICCREA Holding would be used to provide support
for the sector banks if needed.

The Support Rating and SRFs are potentially sensitive to any change in
assumptions around the propensity or ability of Italy to provide timely support
to the bank. This might arise if Italy's rating was downgraded or by changes in
Fitch's view of the authorities' propensity to provide support, which is
currently not factored into the ratings.

SUBORDINATED DEBT AND OTHER HYBRID SECURITIES
The subordinated debt and other hybrid capital issued by IBImpresa is notched
down from ICCREA Holding's VR in accordance with Fitch's criteria to reflect the
different non-performance and relative loss severity risk profiles of these
instruments. Their ratings are primarily sensitive to changes in the VR, which
drives the ratings.

The rating actions are as follows:

Iccrea Holding S.p.A.
Long-term IDR: affirmed at 'BBB+'; Outlook Negative
Short-term IDR: affirmed at 'F2'
VR: affirmed at 'bbb+'
Support Rating: affirmed at '2'
Support Rating Floor: affirmed at 'BBB'

Iccrea Banca S.p.A.
Long-term IDR: affirmed at 'BBB+'; Outlook Negative
Short-term IDR: affirmed at 'F2'
Support Rating: affirmed at '2'
EUR5bn EMTN Programme: affirmed at 'BBB+'/'F2'
Senior unsecured debt: affirmed at 'BBB+'

Iccrea BancaImpresa
Long-term IDR: affirmed at 'BBB+'; Outlook Negative
Short-term IDR affirmed at 'F2'
Support Rating: affirmed at '2'
Senior unsecured debt and EMTN Programme: affirmed at 'BBB+'
Subordinated notes (ISIN XS0222800152 and XS0287519663): affirmed at 'BBB'
Subordinated upper Tier 2 notes (ISIN XS0295539984): affirmed at 'BB+'

Additional information is available on www.fitchratings.com. The ratings above
were solicited by, or on behalf of, the issuer, and therefore, Fitch has been
compensated for the provision of the ratings.

Applicable criteria "Global Financial Institutions Rating Criteria" dated 15
August 2012, "Evaluating Corporate Governance" dated 12 December 2012,
"Assessing and Rating Bank Subordinated and Hybrid Securities" dated 5 December
2012, and "Rating Criteria for Banking Structures Backed by Mutual Support
Mechanisms" dated 20 December 2012 are available at www.fitchratings.com.

Applicable Criteria and Related Research:
Global Financial Institutions Rating Criteria
Evaluating Corporate Governance
Assessing and Rating Bank Subordinated and Hybrid Securities
Rating Criteria for Banking Structures Backed by Mutual Support Mechanisms
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