(Finance) – The rating agency Moody’s has placed all ratings and assessments of BFF Bank. The rating action originates, explains a note, from the supervisory measures undertaken by the Bank of Italy.
The Ratings put under observation include BFF’s Long Term (LT) and Short Term (ST) Deposit Ratings, respectively equal to “Baa3”/”Prime-3”, the Long Term and Senior Unsecured Debt Issuer Ratings equal to “Ba2”, the Non-Cumulative Preferred Stock Rating equal to “B2”(hyb), the Long (LT) and Short Term (ST) Counterparty Risk Ratings (CRR) equal to “Baa2”/”Prime-2 “, the Long (LT) and Short Term (ST) Counterparty Risk (CR) Assessments equal to “Baa2″ (cr)/”Prime-2” (cr), as well as the Baseline Credit Assessment (BCA) and the Adjusted BCA of BFF equal to “ba2”. Previously, the Outlook on BFF’s Long-Term Deposit Rating was Negative and on its Long-Term and Senior Unsecured Debt Issuer Ratings was Stable.
Moody’s rating action also includes a negative adjustment of one notch on corporate behavior, as well as a lowering of the Bank’s governance issuer profile score (IPS) to G-4 from G-2, according to the environmental, social and governance framework (ESG) of the rating agency. As a result, BFF’s credit impact score was reduced to CIS-4 from CIS-2.
The assessment relating to the “review for downgrade” will mainly focus on the implications of the Bank of Italy’s findings and the corrective measures. In Moody’s opinion, BFF’s BCA could stabilize if the corrective measures implemented by the Bank successfully mitigate financial and governance risks. Furthermore, Moody’s would affirm the Deposit and Debt Ratings if the Bank were to maintain the current buffer of bailable liabilities.
BFF “believes it can fully resolve the critical issues raised by Moody’s“, explains the bank in a note. “As indicated in the press release dated 10 May, the findings of the Bank of Italy do not imply an increase in credit losses of the BFF Group portfolio, instead having as their object reporting profiles for prudential purposes “. Therefore, “a possible increase in RWA, which could derive from the findings of the Bank of Italy, would imply an absolutely higher level of capital given an unchanged risk profile of the Bank”. As regards governance, in same press release, “the Bank of Italy – despite the presence of compliance findings – has expressed its belief that the renewed corporate bodies, in their entirety, will be able to make an important contribution to the prompt resolution of the critical issues identified by BFF”. started a constructive dialogue with the Bank of Italy to reach a prompt and positive resolution of the findings”, concludes the note.
The BFF stock currently shows a fractional decline of 0.7% after the jump the day before triggered by rumors of interest from international investors.