Spanish bank ratings downgraded by S and P, Fitch

11th October 2011, Comments 0 comments

The credit ratings of top Spanish banks, including Santander and BBVA, were downgraded on Tuesday by Standard & Poor's and Fitch over poor growth prospects in the eurozone country struggling to slash its deficit.

S&P said the "tougher-than-previously-anticipated macroeconomic and financial environment in Spain" prompted its downgrade of 10 bank ratings.

"In our view, Spain's economy faces dimming growth prospects in the near term, real estate market activity remains depressed, and turbulence in the capital markets has heightened," said Standard & Poor's.

"We believe the correction of imbalances in Spain will continue negatively affecting the financial profiles of Spain's banks in the next 15-18 months," it added.

S&P downgraded Banco Santander's rating one notch to AA- with a negative outlook, as did Fitch.

Banco Bilbao Vizcaya Argentaria had its rating cut by one notch to AA- with a negative outlook by S&P, and one notch by Fitch to A+.

Fitch said its downgrade of six banks followed its cut of Spain's sovereign rating by two notches last week to AA-, and that they remained open for further downgrades.

Spain is slashing spending to reduce its deficit and convince markets it can stay on top of its debt and does not need a bailout.

However, the austerity drive has nearly stalled growth, with S&P others warning Spain risks ending up in double-dip recession.

© 2011 AFP

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