Italian bank Monte dei Paschi downgraded

[October 18, 2012]  MILAN (AP) -- Shares in Italian bank Monte dei Paschi di Siena have shed 6 percent of their value after Moody's cut the bank's credit rating to junk status.

Moody's has dropped the ratings in the world's oldest running bank by two notches to Ba2 from Baaa3 with a negative outlook.

The ratings agency said the bank is likely to need more capital beyond a euro1.5 billion ($1.9 million) injection by the Italian government. The bank has not been able to lift its Core Tier 1 ratio, a key measure of a bank's financial health, to the EU-required level of 9 percent.

The bank's shares were trading down 6.2 percent at euro0.23 on Thursday in strong trading that saw 1 percent of the bank's stock change hands.

[Associated Press]

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