Cost of credit protection for IntesaBci widens due to weak Q3 results

Italy's largest bank reduced its Q3 net loss from €323 million a year ago to €58 million. But this was IntesaBCI's fourth loss in the past five quarters, and it continued to make large provisions for bad loans and cancelled plans to sell its troubled Brazilian operations to Banco Itaú of Brazil.

Rating agency Standard & Poor's cut IntesaBci’s long-term counterparty credit rating to A- from A on fears the bank's weak asset quality makes it more vulnerable than rivals to an economic slump.

IntesaBci’s balance sheet has been hit by exposure to many of the high profile international credit events of the last 12 months, including Enron, WorldCom and Swissair, as well as Argentina’s debt crisis. The bank is currently planning to cut nearly 8,000 jobs - 11% of its workforce. RiskNews reported in September that the bank was downsizing its own credit derivatives business as part of a dramatic restructuring of the business.

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