Moody's downgrades Italian mid-sized lender Banca delle Marche
* Agency cites bad loans, low profitability, low capital level
* Capital raising won't be enough even if it's successful - agency
* S&P says credit losses at regional Veneto Banca higher than expected
MILAN, Sept 5 (Reuters) - Ratings agency Moody's downgraded its assessment of mid-sized Italian lender Banca delle Marche on Thursday, and said the bank would "almost certainly" need external support.
The agency cut its rating on the bank's long-term senior debt and deposits to Caa1 from B3, blaming non-performing loans, deteriorating profitability and a low level of capital Moody's says the bank is unlikely to be able to raise through a planned share issue.
Smaller banks have been hard hit by Italy's longest recession since World War Two, and Banca Marche was placed under special administration by the Bank of Italy last week.
Moody's said the bank is important to its home region and any potential support it might require would be "manageable" for the government, but did not explicitly say the government could help.
Moody's also said the use of a "bail-in" of some of the bank's debt could "increase the political acceptability" of additional taxpayer-funded support.
Banca Marche had approved a 300 million euro ($393.57 million) share issue to take place this year, but said on Friday neither current shareholders nor new investors had made a binding commitment to participate. [full story: nL6N0GV300]
Even if Banca Marche managed to raise capital from existing or new shareholders, "this would lead to capital ratios just sufficient to be above the minimum prescribed by the regulator, without allowing any cushion to withstand the continuing pressures posed by deteriorating asset quality," Moody's said.
The Bank of Italy is conducting audits and putting pressure on mid-sized lenders to strengthen their balance sheets before handing over supervision to the European Central Bank next year.
Standard & Poor's, the other major ratings agency, said on Thursday that regional Italian lender Veneto Banca would incur higher credit losses than the agency had previously expected, due to the fast accumulation of non-performing loans on its balance sheet during the economic downturn.
But S&P affirmed its "BB/B" rating on Veneto Banca and took the view the bank "would likely receive extraordinary financial support from the Italian government if needed".
($1 = 0.7623 euros) (Reporting by Isla Binnie; Editing by Eric Walsh)
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