Moody's assigns negative outlook to Credem, confirms ratings
MILAN Jan 28 (Reuters) - Rating agency Moody's on Tuesday confirmed Credito Emiliano (Credem) long-term deposit ratings of Baa3 but assigned a negative outlook, citing Italy's fragile economic recovery and uncertainty created by a sector-wide European health check.
Moody's said the decision to confirm the mid-sized bank's ratings, ending a review that started in October, reflected its view that the bank's financial fundamentals "have been rather resilient and still maintain some flexibility for small further deterioration."
It said at 4.9 percent as of end-September 2013, Credem's problem loans as a percentage of gross loans were significantly below the 11.3 percent Italian banking system average.
Medium-sized Italian lenders have been bearing the brunt of a sharp rise in bad loans caused by Italy's longest postwar recession, from which the euro zone's third largest economy is only starting to emerge.
Several of these lenders are expected to need recapitalisations as the European Central Bank carries out a thorough review of their riskier assets this year.
Despite Credem's resilience, Moody's said the negative outlook reflected the ongoing uncertainty due to Italy's sluggish economic prospects and the upcoming European stress tests. (Reporting by Silvia Aloisi, editing by David Evans)
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