Standard & Poor's upgrades Mps's individual rating

The Rating Agency Standard & Poor's has today upgraded MPS's stand- alone credit profile to "A-" from "BBB " raising the issue rating on the bank's junior subordinated debt instruments and preferred stock to 'BBB-' from 'BB '.

Standard & Poor's Ratings Services also affirmed its 'A-/A-2' long- and short-term counterparty credit ratings on Italy’s Banca Monte dei Paschi di Siena SpA (MPS). The outlook is stable.

The positive rating action reflects S&P’s view of the Group’s:

Capital Strengthening

" We take a positive view of MPS' decision to address its weak quality of capital, which we consider as one of the bank's main rating constraints. Based on our measure of risk-adjusted capital (RAC), in which we incorporate the increased ACE, we estimate that our RAC ratio for MPS would stand at about 6.8% before diversification effects and 7.6% after diversification effects. This puts MPS close to our average for the world's largest banks

Business Plan 2011-2015 focus on strengthening profitability

" MPS' 2011-2015 business plan focuses on strengthening profitability, mainly through continued cost optimization and increased cross-selling. MPS' ability to continue improving the cost efficiency of its operations after sharp cost cuts in 2010 could in our opinion enable it to narrow the profitability gap it has with peers."

S&P’s Ratings Services concluded its credit update adding that "Improvements in the net NPA ratio and in the NPA coverage ratio closer to levels at higher-rated domestic peers, along with a recovery in core profits, could lead to a positive rating action on MPS in the next two years."