Moody’s changed the outlook on Banco Popolare from negative to positive on Friday because of the bank’s plans to launch a share issue in the first half of 2014 and closer regulatory inspection of its asset quality.

The rating agency rates Banco Popolare Ba3. The Italian bank has announced a share issue for up to Eu1.5bn, fully underwritten (by Mediobanca and UBS) and due to be completed in the first half of this year. The share issue would increase Popolare’s fully-loaded Basel III Common Equity Tier (CET) 1 ratio to about 10%, according to Moody’s.

“The positive outlook reflects the bank’s measures to strengthen its capital adequacy,” it said. “In Moody’s view, the stronger capital levels increase the bank’s resilience ahead of the ECB’s comprehensive assessment and to the stresses under Moody’s adverse scenario, relative to the b3 BCA category.

“Strengthened capital adequacy will also increase the bank’s flexibility to manage the effects of the weak economic environment in Italy.”