Moody's downgrades 28 Spanish banks

As we anticipate moody's send several Spain Banks deeper into junk status


All of Spain’s major banks were hit with cuts of one to four notches – worse than expected and sending several deeper into junk status.

The move followed Moody’s decision this month to slash the sovereign rating from A3 to Baa3, but also reflected the mounting risk of real estate losses, the agency said.

Comparing Spain’s property crisis to Ireland’s, where values have fallen almost twice as much, Moody’s said: “The banks’ exposures to commercial real estate will likely cause higher losses, which might increase the likelihood that these banks will require external support.”

Rival rating agency Standard & Poor's said this month that house prices in Spain could fall another 25pc before the market levels out.

Bankia, which is already due to receive €23.5bn in state aid, was downgraded to junk by Moody's, while Banco Bilbao Vizcaya Argentaria (BBVA), Spain's second largest bank, was cut by three notches to just above junk.

Banco Santander, the parent bank of Santander UK, also saw its rating cut by two notches, to Baa2.

The Telegraph