(Bloomberg) -- UniCredit SpA’s credit rating was lifted on Thursday, providing tailwind as it considers a takeover of rival Commerzbank AG.
Fitch Ratings raised the lender’s credit worthiness to BBB+ from BBB, the firm said in a statement on Thursday. The decision reflects the lender’s “international footprint, with large operations in strong economies,” as well as improved profitability.
UniCredit’s rating at Fitch is now a notch above its home market Italy. That’s because the bank is spread out across various countries, “which should help it navigate risks of a potential default of its home sovereign,” the rating provider said.
The Italian lender last month disclosed a major stake in Commerzbank and Chief Executive Officer Andrea Orcel has said he’s considering a takeover bid. A deal would create a massive new bank in Germany, where UniCredit already maintains a large business.
But Commerzbank CEO Bettina Orlopp has signaled skepticism about the benefits of the transaction, saying that it would put the German lender at risk of a credit rating downgrade. Such a move would raise funding costs and may result in client loss, she has said.
S&P Global Ratings has previously said that Commerzbank’s creditworthiness “could come under pressure” in case of an acquisition given its ratings are currently stronger than UniCredit’s. By contrast, competitor Moody’s has said it wouldn’t expect a takeover to undermine Commerzbank’s financial strength and profile.
UniCredit and Commerzbank are both scheduled to report third-quarter earnings on Wednesday.
(Adds date of earnings in last paragraph.)
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