Three banks that failed the Comprehensive Assessment and still had capital shortfalls at the time of the ECB’s results had covered bonds put on negative review on Friday, with Moody’s doing so for two Banca Carige programmes and two of the Banco Comercial Português group, and DBRS for programmes of Monte dei Paschi di Siena and BCP.

DBRS placed the issuer ratings of MPS and BCP under review with negative implications last Tuesday. The rating agency said it would review the banks’ plans to address the shortfalls and how these will affect their businesses.

DBRS today put the A rating of Banca Monte dei Paschi di Siena Programme 2 covered bonds under review, and the A (low) rating of obrigações hipotecárias of BCP. MPS is rated BBB and BCP BBB (low) by DBRS.

Moody’s also placed on review for downgrade mortgage covered bonds of Banco Comercial Português, which are rated Baa1, as well as those of BCP group member Banco de Investimento Imobiliario, rated B1. It put BCP’s B1 rating on review for downgrade on Thursday in a collection or rating actions prompted by the ECB’s results.

“In Moody’s opinion, inability to remedy the capital shortfall within the required timeframe would increase the likelihood of bail-in, particularly affecting holders of subordinated debt,” it said of the rating actions. “In the event that a bank needed to resort to government support, the EU rules governing state aid would require debt to be bailed-in, particularly subordinated debt.”

“Given the magnitude of the capital shortfalls identified in a few cases, Moody’s does not rule out the possibility of authorities resorting to even more extensive bank restructuring measures which could affect all creditors.”

As part of these rating actions, Moody’s also put Banca Carige’s Caa1 rating on review for downgrade and on Friday it did likewise for the ratings of the Italian bank’s mortgage covered bonds (residential) programme, which is rated Ba1, and mortgage covered bonds 2 (commercial) programme, rated Baa3.