S&P cuts rating of troubled Italian bank
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February 01 2013, 07:59AM
WASHINGTON, Jan 31 AFP - Standard & Poor's has cut its rating of Italy's Banca Monte dei Paschi di Siena (BMPS), citing the revelation of more potential losses on derivatives issued by the bank.
An investigation into the bank's finances "could identify losses larger than originally anticipated," S&P said in cutting BMPS' rating to BB from BB+ and putting it on a negative watch.
"The uncertainties related to the magnitude of these potential losses, and the weaknesses we believe they evidence in BMPS' risk management, are accentuating pressure stemming from the bank's ongoing financial deterioration."
Even if the bank gets support from a planned 3.9 billion euros ($A5.12 billion) bailout from the government, S&P said, "we continue to view BMPS' capital and earnings as 'weak' under our criteria".
Banca Monte di Paschi di Siena, the world's oldest surviving bank and Italy's third biggest, has been forced to resort to public aid to reinforce its core capital after being hit by the eurozone crisis.
The poor management of the bank and the giant loans from the government required to save it have come under intense scrutiny in austerity-hit Italy in recent days and there is an investigation under way over a particularly suspicious derivatives deal.