MILAN - Standard & Poor's on Monday affirmed the ratings of 15 of Italy's biggest banks, and has cut the ratings on 15 more lenders.
The U.S. credit ratings agency warned that Italy's recession will be potentially deeper and more prolonged than previously thought. It said that while problem assets were mounting, many banks had reduced provisions for loan losses, making them more vulnerable.
Investors are concerned that recession-hit Italy will find it more and more difficult to handle its debt burden — about 123 per cent of its €1.58 trillion (US$1.93 trillion) gross domestic product — and have been demanding higher interest rates on its bonds.
The ratings of UniCredit SpA and Intesa Sanpaolo SpA were confirmed by S&P. They were among 34 banks that had their S&P ratings downgraded in February due to the country's financial vulnerability and expectations of lower earnings.
Banca Carige SpA, Banca Popolare dell'Alto Adige and Unione di Banche Italiane, among others, also saw their ratings reduced further.
But there was also some encouraging news for Italian state finances Monday. The Finance Ministry said that tax revenues in the first six months of 2012 had increased by 4.3 per cent compared to the same period in 2011.
Premier Mario Monti's government has worked to crack down on tax evasion since taking office last November.