(Alliance News) - Banca Monte dei Paschi di Siena Spa announced Monday that rating agency DBRS Ratings GmbH has raised the bank's ratings by two notches.

DBRS raised the standalone intrinsic assessment rating, the long-term issuer rating and the long-term senior debt rating to 'BB (high)' from 'BB (low)' and the long-term deposit rating to 'BBB (low)' from 'BB.' The subordinated debt rating was upgraded by three notches to 'BB (low)' from 'B (low)'.

The agency's decision considers the significant improvements made by the bank in the past 12-18 months with the substantial increase in revenues, supported not only by the interest rate scenario but also by improvements in the business mix. In addition, the successful staffing maneuver implemented in December 2022, with the voluntary exit of about 4,000 employees, has structurally improved operational efficiency. The upgrade also reflects the improvement in the cost of risk to a structurally lower level.

The outlook was upgraded to Positive as Morningstar DBRS expects these elements to continue to support earnings in 2024.

The ratings upgrade also reflects the strong level of capitalization, for which MPS ranks in the highest range among its peers, and the return to dividend payments, as well as the significant reduction in legal risks due to last year's positive judicial outcomes.

For the agency, moreover, MPS is one of Italy's largest banks and can count on a franchise that is well distributed on a national basis. Finally, the ratings also continue to be supported by a stable funding and liquidity profile and renewed access to the institutional funding market.

Montepaschi's stock closed Monday up 1.0 percent at EUR4.02 per share.

By Giuseppe Fabio Ciccomascolo, Alliance News senior reporter

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