Moody's downgrades 28 Spanish banks

26 June 2012

A significant number of Spanish banks have been downgraded amid ongoing concerns about the country's debt crisis.

Leading ratings agency Moody's has announced that 28 financiers based in the Iberian nation have been cut on the basis that its sovereign fiscal problems are making it increasingly difficult for the government to support its ailing banks.

The administration's issues were underlined earlier this month when Moody's decided to reduce the state's credit worthiness score from A3 to Baa3.

And the knock-on impact of this decision has led to the body downgrading several banks, including the country's largest two lenders Banco Bilbao Vizcaya Argentaria and Banco Santander.

On top of Spain's sovereign debt problem, Moody's cited the "expectation that the banks' exposures to commercial real estate will likely cause higher losses", as another major factor behind this action.

"[This] might increase the likelihood that these banks will require external support," it added.

By Asim Shah

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