Corporate Credit Rating 2021 for FINECOBANK - BANCA FINECO S.P.A. (Affirm)

modefinance published on its CRA website the Unsolicited Corporate Credit Rating of FINECOBANK BANCA FINECO S.P.A., reviewed after the publication of the half-year accounts 2020. modefinance confirms the rating previously assigned to the entity, equals to A2- (affirm). The company has confirmed its high capability to meet its financial obligations, proving to be a very good bank with very good capability of repaying financial obligations.

FinecoBank Banca Fineco S.p.A. was founded in the lateseventies as a company specialized in factoring and leasing operations. In1999, after several years of M&A, FinecoBank started to focus its activity on onlineservices related to corporate finance, providing highly customized solutions inorder to set the standard in a highly competitive environment.

FinecoBank was founded in 1999, hence it appears to be a very young institution, but its innovative business model compared to the reference market, make it a pioneer in the online banking market. FinecoBank S.p.A. was among the first in Italy to digitalize the banking industry through a service available mainly online, becoming in fact a virtual banking service; this factor favored bank’s activities during the Covid-19 crisis.

The key figure in FinecoBank is the Chief Executive Officer Alessandro Foti. He joined Fineco Holding S.p.A. in 1989 as a manager responsibile for capital markets. In December 2000, he was appointed Chief Executive Officer of the new banking company FinecoBank S.p.A.

Despite the difficult and challenging period related to the Coronavirus outbreak, Fineco registered very good and encouraging results in all considered areas, by increasing lending to customers, keeping the level of non-performing loans unchanged and further consolidating the profitability area, with a good level of interest margins and operating revenues.

The capitalization of the bank shows extremely good figures as far as regulatory capital ratios are concerned. Compared to other figures of its pertaining sector, FinecoBank overperformed the peer group in all the considered areas: the rated entity recorded very good figures in terms of size, profitability and asset quality. Over the considered period, the peer group has shown an improving trend, above all in asset quality. Indeed, the impaired loans ratio reached a median value of 3.16% in 2020, while in 2018 amounted to 6.75%.

As far as relevant news of the industry are concerned, Italy is one of the most affected countries by the coronavirus pandemic. Thus, the impacts of economic recession will continue to influence the financial sector. The crisis has led to a decline of the business activity of banks and insurance undertakings, since non-performing loans increased and the profitability dropped, dragged by the reduction of interest rates. On the other hand, the unprecedented fiscal support to the economy (through the recovery funds) is expected to consistently help the recovery and the return to pre-crisis levels in 2022.

The COVID-19 pandemic plunged the EU into its worst-ever recession, but the forceful policy reaction helped mitigate the negative impact of the crisis. Beside the existing tool (ESM), the EU adopted two additional ones: for employment support (SURE) and for national recovery (Next Generation EU). A swift and effective implementation of recovery plans is the key challenge for turning this opportunity into success. Vaccination plans are now giving hope for a more robust recovery, but low effectiveness in case of variants or insufficient coverage of the population are downside risks.

The political risk for the bank is included in the previous paragraph and we can’t detect additional factors that haven’t been considered before. Since every government of the EU faces unprecedented challenges, the recovery depends on their capability of implementing all the tools available to them.

In the following table, the addressing factors, actions or events that could lead to an upgrade or a downgrade are summarized:

The present Corporate Credit rating is issued by modefinance under EU Regulation 1060/2009 and following amendments.

The present rating is unsolicited: the rated entity and/or related third parties have not participated in the rating process and modefinance has no access to accounts or other relevant internal documents of the rated entity and/or related third parties.

More comprehensive information on modefinance Corporate Credit Ratings are available at this link. The present Corporate Credit Rating is issued on MORE for Banks Methodology 2.0 and Rating for Banks Methodology 1.0.

A comprehensive description of both methodologies, as well as information on modefinance Rating Scale and Mappings, is available at this link.

For information on historical default rates of modefinance Corporate Credit Ratings please refer to ESMA Central Repository and ESMA European Rating Platform.

modefinance refers to default as a company under bankruptcy, or under liquidation status, or under administration or for which missed payments on a financial obligation are officially recorded. The quality of the information available on the rated entity and used to determine the present rating was judged by modefinance as satisfactory. Please note that modefinance however is not in a position to guarantee the accuracy of those information. As such, modefinance can accept no liability whatsoever for actions taken based on any information that may subsequently prove to be incorrect.

The present credit rating was notified to the rated entity in order to identify potential factual errors, as prescribed by the CRA Regulation.No amendments were applied after the notification process.

The Rated Entity or Related Third Party has not purchased ancillary services from modefinance. The rating action issued by modefinance was performed independently. The analysts, members of the rating team involved in the process, modefinance Srl and its members and shareholders do not have any conflicts of interest in relation to the Rated Entity and/or Related Third Parties. If in the future a potential conflict of interest is identified in relation to the persons reported above, modefinance Ratings will provide the appropriate information and if necessary, the rating will be withdrawn.

The present Credit Rating is an opinion of the general creditworthiness thatmodefinance issues on the rated entity and should be relied upon to a limiteddegree. The issued rating is subject to an ongoing monitoring until withdrawal.

eva.vocci@modefinance.com
+39 040 3756740

Christian Raimondo - Assistant Analyst
christian.raimondo@modefinance.com
+39 040 3756740

Pinar Dilek - Responsible for Rating Approval
pinar.dilek@modefinance.com
+39 040 3756740