Banca Popolare di Sondrio

Regulatory Filings • Apr 8, 2020

Informazione Regolamentata n. 0051-12-2020		Data/Ora Ricezione 08 Aprile 2020 18:24:48	MTA
Societa'	:	BANCA POPOLARE DI SONDRIO
Identificativo Informazione Regolamentata	:	130510
Nome utilizzatore	:	BPOPSONN01 - ROVEDATTI
Tipologia	:	3.1
Data/Ora Ricezione	:	08 Aprile 2020 18:24:48
Data/Ora Inizio Diffusione presunta	:	08 Aprile 2020 18:24:49
Oggetto	:	Rating
Testo del comunicato

Vedi allegato.

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Società cooperativa per azioni - fondata nel 1871 Sede sociale e direzione generale: I - 23100 Sondrio So - Piazza Garibaldi 16 Iscritta al Registro delle Imprese di Sondrio al n. 00053810149 Iscritta all'Albo delle Banche al n. 842 Capogruppo del Gruppo bancario Banca Popolare di Sondrio, iscritto all'Albo dei Gruppi bancari al n. 5696.0 Iscritta all'Albo delle Società Cooperative al n. A160536 Aderente al Fondo Interbancario di Tutela dei Depositi Codice fiscale e Partita IVA: 00053810149 Capitale Sociale € 1.360.157.331 - Riserve € € 983.893.092 (dati approvati dall'Assemblea dei soci del 27/4/2019)

COMUNICATO STAMPA

Scope Ratings conferma il rating del merito di credito emittente di Banca Popolare di Sondrio al livello investment grade "BBB-" e rivede l'outlook da positivo a stabile.

Si informa che in data odierna l'agenzia di valutazione del credito Scope Ratings ha confermato il rating assegnato al merito di credito emittente di Banca Popolare di Sondrio al livello investment grade "BBB-" e rivisto l'outlook da positivo a stabile.

Si allega il comunicato stampa pubblicato da Scope Ratings.

Sondrio, 08 aprile 2020

BANCA POPOLARE DI SONDRIO SCPA

CONTATTI SOCIETARI:

Investor Relations Dott. Michele Minelli 0342-528.745 michele.minelli@popso.it Relazioni esterne Rag. Paolo Lorenzini 0342-528.212 paolo.lorenzini@popso.it

Indirizzo internet aziendale: www.popso.it

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Società cooperativa per azioni - fondata nel 1871 Sede sociale e direzione generale: I - 23100 Sondrio So - Piazza Garibaldi 16 Iscritta al Registro delle Imprese di Sondrio al n. 00053810149 Iscritta all'Albo delle Banche al n. 842 Capogruppo del Gruppo bancario Banca Popolare di Sondrio, iscritto all'Albo dei Gruppi bancari al n. 5696.0 Iscritta all'Albo delle Società Cooperative al n. A160536 Aderente al Fondo Interbancario di Tutela dei Depositi Codice fiscale e Partita IVA: 00053810149 Capitale Sociale € 1.360.157.331 - Riserve € € 983.893.092 (dati approvati dall'Assemblea dei soci del 27/4/2019)

PRESS RELEASE

Scope Ratings confirms the investment grade issuer rating of "BBB-" on Banca Popolare di Sondrio and changes the otlook to stable from positive.

It is hereby informed that today the credit rating agency Scope Ratings has confirmed the issuer rating investment grade level of "BBB-" assigned to Banca Popolare di Sondrio and revised the outlook to stable from positive.

Please find attached the document published by Scope Ratings.

Sondrio, 8 April 2020

BANCA POPOLARE DI SONDRIO SCPA

COMPANY CONTACTS:

Investor Relations Dott. Michele Minelli 0342-528.745 michele.minelli@popso.it External Relations Rag. Paolo Lorenzini 0342-528.212 paolo.lorenzini@popso.it

Company website: www.popso.it

Credit Rating Announcement 08 April 2020

Scope affirms issuer rating on Banca Popolare di Sondrio, outlook is changed to stable

The change in the outlook reflects Scope's view that upside and downside risks to the BBB- rating are fairly balanced.

The latest information on the rating, including rating reports and related methodologies, is available on this LINK.

Rating action

Scope affirms its BBB- issuer rating on Banca Popolare di Sondrio SCpA (BPS) and changes the outlook to stable from positive. The change in the outlook reflects Scope's view that upside and downside risks to the BBB- rating are fairly balanced.

Rating rationale and rating change drivers

The sudden deterioration in the operating environment following the Covid 19 outbreak in Q1 2020 and the ensuing lockdown is likely to drive Italy into a recession, which could in turn put pressure on the bank's asset quality and profitability measures. Scope flags that a material worsening in BPS' operating performance in the medium term would be negative for the rating.

Among key positive rating change drivers, Scope flags the potential for a material acceleration in disposing of legacy non-performing loans. The derisking process of historical problem loans, which had already been accelerating in recent quarters, should continue in 2020 thanks to planned NPE sales, though we see increased risk of a timing slippage around these transactions as market appetite for NPE deals may be lower given the uncertain economic outlook.

The BBB- rating is based on BPS' focused franchise in the Italian region of Lombardy, one of the wealthiest areas in Europe. BPS is a medium-sized cooperative bank primarily operating in Milan and other provinces in Lombardy. The bank also has activities in Rome and a more marginal presence in several other northern Italian regions. BPS is the parent company of the BPS group, which includes a small bank in Switzerland (BPS Suisse), Banca della Nuova Terra and Factorit, a factoring joint venture with Banco BPM.

Like other Italian banks, BPS had seen a material deterioration in asset quality during the past decade, though ratios have improved. An acceleration of balance sheet derisking is planned for 2020, with the sale of EUR 1bn in NPLs planned for the first half of the year. This amount represents almost a quarter of the bank's total stock of NPEs. Once completed, such a sale would allow BPS to significantly reduce its NPE ratio, from the current 12.5% to c. 9.4%, partly addressing what Scope sees as a key weakness of the bank.

However, as Italy heads into a recession for 2020, downside risks to the group's asset quality have increased, despite official measures to support the real economy that will partly cushion the deterioration in borrowers' finances. We note that as part of the Italian government package to support credit flows, some business loans will be partly guaranteed, limiting the need for new provisions, at least in the short run.

The bank's capital ratios are strong, and have improved in 2019, also supported by the adoption of advanced internal-ratings-based models for credit risk. At the end of 2019, BPS reported a CET1 ratio of 15.7% and a total capital ratio of 18.6%. These levels are materially above the 2019 SREP requirements of 9.25% for CET1 and 12.75% for total capital. The ample headroom to requirements allows BPS strategic flexibility to further accelerate derisking if needed and to absorb higher loan loss provisions that may be needed in the current environment.

BPS' profitability is low but resilient, hovering around the mid-single-digit range. The bank maintained a solid earnings track record during the crisis and has displayed an ability to absorb bad-loan provisions through operating profitability.

Another key negative rating-change driver would be a rekindling of speculation about Italy's exit from the European Monetary Union. Such an event, which Scope sees as extremely unlikely, could result in a multiple-notch downgrade for BPS, as well as for other Italian banks.

Stress testing & cash flow analysis

No stress testing was performed. No cash flow analysis was performed.

Methodology

The methodology used for this rating(s) and/or rating outlook(s) (Bank Rating Methodology, published on 3 May 2019) is available on https://www.scoperatings.com/#!methodology/list.

Information on the meaning of each rating category, including definitions of default and recoveries can be viewed in the "Rating Definitions - Credit Ratings and Ancillary Services" published on https://www.scoperatings.com/#!governance-and-policies/rating-scale. Historical default rates of the entities rated by Scope Ratings can be viewed in the rating performance report on https://www.scoperatings.com/#governance-and-policies/regulatory-ESMA. Please also refer to the central platform (CEREP) of the European Securities and Markets Authority (ESMA): http://cerep.esma.europa.eu/cerep-web/statistics/defaults.xhtml. A comprehensive clarification of Scope's definitions of default and rating notations can be found at https://www.scoperatings.com/#governance-andpolicies/rating-scale. Guidance and information on how Environmental, Social or Governance factors (ESG factor) are incorporated into the rating can be found in the respective sections of the methodologies or guidance documents provided on https://www.scoperatings.com/#!methodology/list.

The rating outlook indicates the most likely direction of the rating if the rating were to change within the next 12 to 18 months.

Solicitation, key sources and quality of information

The rated entity and/or its agents participated in the rating process.

The following substantially material sources of information were used to prepare the credit rating: public domain, the rated entity and Scope internal sources.

Scope considers the quality of information available to Scope on the rated entity or instrument to be satisfactory. The information and data supporting Scope's ratings originate from sources Scope considers to be reliable and accurate. Scope does not, however, independently verify the reliability and accuracy of the information and data.

Prior to the issuance of the rating or outlook action, the rated entity was given the opportunity to review the rating and/or outlook and the principal grounds on which the credit rating and/or outlook is based. Following that review, the rating was not amended before being issued.

Regulatory disclosures

This credit rating and/or rating outlook is issued by Scope Ratings GmbH, Lenéestraße 5, D-10785 Berlin, Tel +49 30 27891-0. Lead analyst: Marco Troiano, Executive Director

Person responsible for approval of the rating: Dierk Brandenburg, Managing Director

The ratings/outlooks were first released by Scope on 10 September 2018. The ratings/outlooks were last updated on 20 November 2019.

Potential conflicts

Please see www.scoperatings.com for a list of potential conflicts of interest related to the issuance of credit ratings. Scope provided the following ancillary services to the rated entity and/or its agents within two years preceding this credit rating action: Credit Estimate.

Conditions of use / exclusion of liability

© 2020 Scope SE & Co. KGaA and all its subsidiaries including Scope Ratings GmbH, Scope Analysis GmbH, Scope Investor Services GmbH and Scope Risk Solutions GmbH (collectively, Scope). All rights reserved. The information and data supporting Scope's ratings, rating reports, rating opinions and related research and credit opinions originate from sources Scope considers to be reliable and accurate. Scope does not, however, independently verify the reliability and accuracy of the information and data. Scope's ratings, rating reports, rating opinions, or related research and credit opinions are provided 'as is' without any representation or warranty of any kind. In no circumstance shall Scope or its directors, officers, employees and other representatives be liable to any party for any direct, indirect, incidental or other damages, expenses of any kind, or losses arising from any use of Scope's ratings, rating reports, rating opinions, related research or credit opinions. Ratings and other related credit opinions issued by Scope are, and have to be viewed by any party as, opinions on relative credit risk and not a statement of fact or recommendation to purchase, hold or sell securities. Past performance does not necessarily predict future results. Any report issued by Scope is not a prospectus or similar document related to a debt security or issuing entity. Scope issues credit ratings and related research and opinions with the understanding and expectation that parties using them will assess independently the suitability of each security for investment or transaction purposes. Scope's credit ratings address relative credit risk, they do not address other risks such as market, liquidity, legal, or volatility. The information and data included herein is protected by copyright and other laws. To reproduce, transmit, transfer, disseminate, translate, resell, or store for subsequent use for any such purpose the information and data contained herein, contact Scope Ratings GmbH at Lennéstraße 5 D-10785 Berlin.

Scope Ratings GmbH, Lennéstraße 5, 10785 Berlin, District Court for Berlin (Charlottenburg) HRB 192993 B, Managing Director: Guillaume Jolivet.

About Scope Ratings GmbH

Scope Ratings GmbH is part of the Scope Group with headquarters in Berlin and offices in Frankfurt, London, Madrid, Milan, Oslo and Paris. As the leading European credit rating agency, the company specialises in the analysis and ratings of financial institutions, corporates, structured finance, project finance and public finance. Scope Ratings offers a credit risk analysis that is opinion-driven, forward-looking and non-mechanistic, an approach which adds to a greater diversity of opinions for institutional investors. Scope Ratings is a credit rating agency registered in accordance with the EU rating regulation and operating in the European Union with ECAI status.

Contact

Analyst Team leader Marco Troiano David Bergman m.troiano@scoperatings.com d.bergman@scoperatings.com

Scope Ratings GmbH • Lennéstraße 5 • D-10785 Berlin • Phone: +49 30 27891-0 • Fax: +49 30 27891-0

Executive Board: Guillaume Jolivet • District Court: Berlin: HRB 192993 B • VAT identification number: DE226486027

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