Fitch downgrades Spanish savings bank federation
Rating agency Fitch downgraded Spain's savings banks' federation by a notch Wednesday and said the outlook was negative, citing concerns about liquidity pressures in the sector.
The blow fell hours after Moody's Investors Service had placed Spain's sovereign debt on review for a possible downgrade because of a debt refinancing crunch in 2011 made worse by the country's banking problems.
Fitch trimmed the Spanish Federation of Savings Banks' (CECA) long term debt rating by one notch to a high "A-plus" with a negative outlook and the short-term rating to "F1".
CECA, which provides the key financial services to savings banks as well as being their representative body, was heavily impacted by problems in the sector, it said.
"As well as Fitch's concerns abbout the availability of external liquidity to the caja (savings bank) sector, the negative outlook factors in the agency's view that CECA's business will be affected by the consolidation the cajas are undergoing," Fitch said in a statement.
"This will result in growing risk concentration and CECA's business volumes may shrink given that in future there will be fewer cajas in Spain," the agency said.
Many regional Spanish savings banks have been heavily exposed to bad debt since the collapse of the property sector at the end of 2008. They account for about half of all lending in Spain.
© 2010 AFP