Italy's banking and business community responded angrily yesterday to a mass downgrade of Italian banks by the credit rating agency Moody's, calling the move irresponsible and an assault on the austerity-hit country as it struggles with an economic crisis.
Already battling shrinking demand and soaring bad loans, Italian banks suffered a further blow as the US agency slashed the credit ratings on 26 local lenders, adding to their difficulties in raising funds.
"Moody's decision is an assault against Italy, its companies, its families," the Italian banking lobby ABI said. "Once more rating agencies turn out to be a destabilising factor for financial markets with their partial and contradictory statements."
While large groups such as Intesa Sanpaolo and UniCredit have enough international reach and capital to absorb the hit, it is more problematic for smaller lenders such as Banca Monte dei Paschi di Siena, which now stands just above junk or non-investment grade status.
Repeated rounds of rating downgrades have added to funding difficulties for banks in the weakest eurozone members, increasing their reliance on ECB funds.
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