Moody’s downgraded UniCredit Bank Austria from A3 to Baa1 yesterday (Monday) as a consequence of the weakening credit strength of its parent, Italy’s UniCredit, whose standalone credit assessment the rating agency lowered.

Moody’s affirmed UniCredit’s long term senior ratings at Baa2 yesterday but cut the bank’s baseline credit assessment from baa2 to baa3 because of weakening profitability and asset quality.

The rating agency then downgraded UniCredit Bank Austria by one notch, saying this reflects a reduction in uplift for parental support, from two notches to one, and is driven by the weakening credit strength of UniCredit.

However, Moody’s continues to assume a high likelihood of parental support in case of need, it added.

UniCredit’s German subsidiary, UniCredit Bank, was affirmed at A3 yesterday.

The aforementioned ratings are on negative outlook.