Moody's downgrades 16 Spanish banks
19 May 2012 6:18 AM GMT
Moody's has cut the debt ratings of 16 Spanish banks by one to three notches, citing the effects of the ongoing recession and the Spanish government's own reduced creditworthiness.
The leading bank, Santander, and the number two BBVA, were both hit with three-notch downgrades from Aa3 previously to A3, which for Moody's is a upper-medium credit grade, with still low credit risk.
Two other large banks, Banesto and CaixaBank, were also cut to A3.
Not included in the ratings review was the fourth largest bank Bankia, which the government intervened to prop up on 9 May, taking a 45 per cent stake.
On Thursday Bankia fought off rumours it was hit with a run on deposits, as nervousness around the eurozone grew over the entire Spanish banking sector. Moody's cited 'renewed recession, the ongoing realestate crisis and persistent high levels of unemployment' as key to the ratings reduction.
It also blamed the reduced creditworthiness of the Spanish government, 'which weighs on banks' stand-alone profiles and affects the ability of the government to support banks.'
Banks are suffering from the sharp deterioration of asset quality.
Moody's said it recognised some positive trends which limited the downgrades, including the some improvement in the banks' capital strengths, liquidity support from the European Central Bank, and support from Madrid.
Also cut was Santander's British subsidiary, Santander UK, falling from A1 to A2, one level higher than its parent.
Moody's explained in the report that Santander UK 'continues to benefit... from UK systemic support given its nationwide network; its important role in the UK payments system; and its large market shares in UK deposits and loans.'
The leading bank, Santander, and the number two BBVA, were both hit with three-notch downgrades from Aa3 previously to A3, which for Moody's is a upper-medium credit grade, with still low credit risk.
Two other large banks, Banesto and CaixaBank, were also cut to A3.
Not included in the ratings review was the fourth largest bank Bankia, which the government intervened to prop up on 9 May, taking a 45 per cent stake.
On Thursday Bankia fought off rumours it was hit with a run on deposits, as nervousness around the eurozone grew over the entire Spanish banking sector. Moody's cited 'renewed recession, the ongoing realestate crisis and persistent high levels of unemployment' as key to the ratings reduction.
It also blamed the reduced creditworthiness of the Spanish government, 'which weighs on banks' stand-alone profiles and affects the ability of the government to support banks.'
Banks are suffering from the sharp deterioration of asset quality.
Moody's said it recognised some positive trends which limited the downgrades, including the some improvement in the banks' capital strengths, liquidity support from the European Central Bank, and support from Madrid.
Also cut was Santander's British subsidiary, Santander UK, falling from A1 to A2, one level higher than its parent.
Moody's explained in the report that Santander UK 'continues to benefit... from UK systemic support given its nationwide network; its important role in the UK payments system; and its large market shares in UK deposits and loans.'
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