NEW YORK - Moody's Investors Service said it had downgraded the long-term debt of Banca Nazionale del Lavoro to Aa3 from Aa1.

The move affects about $2.7 billion in debt of the Italian bank.

Moody's cited "concerns about asset quality," the effectiveness of risk management controls, and the longer-term profit outlook in light of domestic price competition.

"BNL possesses a fundamentally strong commercial banking franchise," Moody's said, "but has experienced setbacks in overcoming past problems involving questionable lending practices and unfocused expansion."

The bank, which has $98 billion in assets, "continues to benefit from a close and supportive relationship" with the Italian Treasury, its effective owner.

Debt issues of several Lavoro affiliates were also downgraded, Moody's said. But the Prime-1 deposit rating, applying to commercial paper of BNL U.S. Corp., was not under review.

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