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Bond Market News
Banca Monte Upgraded to BBB- by Fitch
July 7, 2025
Banca Monte dei Paschi di Siena (MPS) was upgraded to BBB- from BB+ by Fitch on Friday, reflecting its stable business model, decent revenue diversification between wealth management (WM) and insurance products and an adequate franchise in Italy post restructuring. Fitch notes that MPS has sustainably reduced its risk appetite with its tightened underwriting standards in recent years. Although the impaired loan ratio of almost 5% at end-March 2025 is above industry standards, Fitch expects the ratio to gradually fall towards 4% by end-2026. MPS’s profitability has also increased on the back of fee-income generation, effective cost optimisation and reduced loan impairment charges.
However, Fitch expects Operating Profit/Risk-Weighted Assets of 3.6% in 1Q2025 to stabilise at 2.6% in the next two years as interest rates fall. MPS’s CET1 ratio of 19.6% at end-March 2025 has satisfactory buffers over regulatory minimums, and has enough headroom if it acquires Mediobanca. Although the potential acquisition of Mediobanca poses execution risks, it could enhance its WM and consumer finance franchise, the rating agency noted.
MPS’s EUR 8.5% 2030s are trading stable at 101.06, yielding 2.16%.
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