According to Moody's the decision to review the ratings for downgrade reflects growing concerns regarding the bank's deteriorating asset quality and the adequacy of provisioning, against the backdrop of a very challenging operating environment in Italy. The concerns are further based on the bank's weak profitability, which is still influenced negatively by the restructuring of its consumer finance subsidiary ApuliaProntoPrestito.

RATINGS RATIONALE

Since 2009 Bancapulia's profitability has been weak, with losses being incurred in three of the last four years. This has been affected by the bank's consumer lending subsidiary which has been suffering from weak operating environment in Italy. Moody's said that the review will focus on the extent to which profitability can be restored to a satisfactory level.

BancApulia' asset quality is weak. Problem loans(1) as a percentage of gross loans were 10.8%(2) at June 2012 (December 2011: 9.2%). Moreover, the coverage of the problem loans by provisions is low and has been declining. Overall coverage (loan loss reserves % problem loans) stood at 30% at June 2012, against 37% in 2008, which is significantly below the banking system's average.

Established in 1924 BancApulia is a small regional retail bank with total assets of Eur5.5 billion at June 2012. It was formed through the merger of various local banks and is based in the Province of Foggia, part of the economically weak region of Puglia in Southern Italy. In January 2010 the bank merged with Banca Meridiana, a neighboring local bank. Through the merger of BancApulia with Banca Meridiana in 2010, Veneto Banca has become the controlling shareholder of BancApulia. Current shareholders are: Veneto Banca 70%, Chirò family 27% with the balance held by private shareholders, mainly local private entrepreneurs.

WHAT COULD CHANGE THE RATING UP/DOWN

As indicated by the review for downgrade, Moody's currently does not expect any upward rating pressure.

Downward pressure on the bank's standalone credit assessment would primarily stem from further asset quality deterioration, coupled with insufficient profitability to allow for an improvement in the coverage ratio of its problem loans. The bank's Baa3/Prime-3 deposit ratings currently incorporate one notch of uplift due to systemic (government) support and parental support from Veneto Banca Scpa (unrated), from the bank's standalone credit strength. Therefore, any change in the BFSR will likely have an impact on the deposit ratings.

(1) Problem loans include: non-performing loans (sofferenze), watchlist (incagli - including only those over 90 days overdue), restructured (ristrutturati) and past due loans (scaduti).

(2) Unless otherwise noted, data source is Moody's Financial Metrics or Company data.

LIST OF AFFECTED CREDIT RATINGS

Bank Deposits Baa3/P-3 -- on review for downgrade

Bank Financial Strength D+ -- on review for downgrade

Baseline Credit Assessment (ba1) -- on review for downgrade

Adjusted Baseline Credit Assessment (baa3) -- on review for downgrade

METHODOLOGY USED

The principal methodology used in this rating was Moody's Consolidated Global Bank Rating Methodology published in June 2012. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

Bancapulia SpA is headquartered in San Severo, Italy. As of June 2012, it had total assets of EUR5.5 billion.

REGULATORY DISCLOSURES

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Christina Sterr Analyst Financial Institutions Group Moody's Italia S.r.l Corso di Porta Romana 68 Milan 20122 Italy Telephone:+39-02-9148-1100Johannes Wassenberg MD - Banking Financial Institutions Group JOURNALISTS: 44 20 7772 5456 SUBSCRIBERS: 44 20 7772 5454 Releasing Office: Moody's Italia S.r.l Corso di Porta Romana 68 Milan 20122 Italy Telephone:+39-02-9148-1100(C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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