Moody’s warns it could cut Spanish bank ratings

Ratings agency Moody’s warned Monday it might cut the ratings of a number of Spanish banks, citing both their real estate exposure and weaker ability to generate earnings.

Moody’s said it had placed on review for possible downgrade Banco Cooperativo, Banco Sabadell; Bankia and its holding company, Banco Financiero y de Ahorro (BFA); Bankinter, CaixaBank and its holding company, La Caixa; Confederacion Espanola de Cajas de Ahorro (CECA); Caja Rural de Granada; Ibercaja Banco; and Lico Leasing.

Their current ratings run from AA3 for CaixaBank to Baa3 for Lico.

“This follows the rating agency’s reassessment of the financial strength of all Spanish banks reflecting increased loss expectations with respect to their commercial real estate exposure,” Moody’s said.

It also said that, under pressure to boost capital reserves and raise provisions as the Spanish economy stalls, the banks faced a lower capacity to generate earnings.

Moody’s said it was reviewing for a possible upgrade one Spanish bank, Banco CAM, which is being taken over by Banco Sabadell.