Shares in Italian mid-tier lender Banca Popolare di Milano (Milan: PMI.MI - news) fall 3.5 percent after Moody's downgraded its long-term deposit rating and senior debt rating overnight by three notches, to Ba3 from Baa3.
Moody's, which said its move was due to the bank's deteriorating asset quality, pressure on earnings and a modest capital base, is the second rating agency to have cut the lender to below investment grade after Standard & Poor's.
The stock is also likely to be weighed down by a looming 500 million euros ($643.10 million) capital increase, expected in September-October and worth around a third of the bank's current market capitalisation, says an analyst.
($1 = 0.7775 euros)
Reuters messaging rm://email@example.com