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Moody’s cuts ratings of 16 Spanish banks

 
 
 
 
 
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Moody’s Investors Service

The European banking industry has suffered another crushing blow after Moody’s ratings agency downgraded the credit ratings of 16 Spanish banks, citing the weakened government’s ability to support some banks.

The agency downgraded the long-term debt and deposit ratings by one to three notches for 16 Spanish banks and Santander UK PLC, a UK-domiciled subsidiary of Banco Santander SA.

Among those downgraded on Thursday are Spain’s two largest banks, Banco Santander (Spain) SA and Banco Bilbao Vizcaya Argentaria SA.

The debt and deposit ratings declined by one notch for five banks, by two notches for three banks and by three notches for nine banks. The short-term ratings for 13 banks have also been downgraded between one and two notches, triggered by the long-term ratings changes.

The outlooks on the debt and deposit ratings for ten of the 17 banks downgraded today are now negative. For the remaining seven banks affected by today’s actions, their ratings remain on review for a further downgrade.

Also on Thursday, Moody’s downgraded the ratings of the Spanish regions of Catalunya, Murcia, Andalucia and Extremadura due to their poor fiscal performance in 2011 and the low probability that the regional governments will be able to meet the 2012 deficit target set by the central government.

The Spanish downgrade comes shortly after the agency cut the ratings of 26 Italian banks on May 14, including Italy’s largest, UniCredit and Intesa Sanpaolo. Moody’s dropped its long-term debt and deposit ratings for financial institutions due to the recession, tough austerity measures and €1.9 trillion of outstanding public debt. This resulted in lower loan demand and more loan losses for Italian banks.

The move comes as no surprise. Moody’s has been poised to cut the ratings cut since February, when the agency announced it was planning to downgrade 122 European financial institutions by May.

The ratings of 114 banks and nine investment banks from 16 European countries were put under consideration, with the downgrade risks mainly relating to the eurozone periphery.

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  • juancho

    I love how Moody’s and S&P are downgrading EVERYTHING, EVERYWHERE except for the United States, obviously. Why don’t they rate the current situation of the U.S’s Federal Reserve Bank? I’d LOVE to see how they’ll do ANYTHING to hide to the public that American DEBT rises to 14 TRILLION DOLLARS. THAT IS MORE THAN TRIPLE THAN THE EUROPEAN DEBT, PEOPLE. This American debt is actually way bigger than their very own annual GDP, which Spain, for example, isn’t suffering as badly from it. But here we have these corrupted rating agencies, creating negative effects on the crisis and ON PURPOSE, to everyone except their very own banks. THIS IS WRONG.

    I’m tired of the American government being the only one in the world and in this crisis who is constantly printing and injecting money to their economy (which will cause severe inflation in the future) when the rest of the world is going the hard way and trying to regain lost money by any means possible, EXCEPT ECONOMIC INJECTION.
    THE U.S.A IS TAKING MEASURES THAT UNDEVELOPED COUNTRIES USUALLY WORK WITH, AND THOSE SO CALLED “LESS DEVELOPED” COUNTRIES ARE TAKING MEASURES THAT COUNTRIES LIKE THE U.S.A SHOULD BE TAKING RIGHT NOW. I’m sorry for you North Americans, since these measures will severely affect the U.S in the near and far FUTURE. Just one example to finish, Zimbabue is the second country in the world that prints more money in the world after the U.S. The economic result is Zimbabwe is the following: 1€ equals 50 TRILLION Zimbabwean dollars. This will not get at ease until the end of this century for them. Obviously not in the same scale, but at this pace the U.S is gonna end up (in 10-20 years from now) worse than the Spanish, Italian or Irish situation.

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