S&P lowers UniCredit

Standard & Poor's said it lowered the long-term counterparty credit ratings on UniCredit SpA to A from A+ and affirmed its A-1 short-term rating.

The outlook is stable.

"The downgrade reflects our expectation that worsening macroeconomic conditions in Central and Eastern Europe as well as in Western Europe will lead to high asset quality and profitability pressures for UniCredit in 2009 and 2010," S&P analyst Renato Panichi said in a statement.

Ratings reflect a balancing of expectation of a weaker credit and financial performance with the bank's high business and earnings diversification and its franchise in Italy, the German State of Bavaria, the Republic of Austria and Central and Eastern European countries, the agency noted.

Unicredit's improved capital position is not considered a ratings strength, given the uncertainties about the scope and length of the current recession, S&P said.

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