More downgrades for Spain

Standard & Poor's
Further downgrades for Spain

Ratings agency Standard & Poor’s lowered the credit rating of five Spanish banks on Friday, following the agency’s downgrade of Spain last month.

According to the agency’s statement the downgraded banks are Banco Popular, Bankinter, Banca Civica and the recently part-nationalised Bankia along with its parent Banco Financiero y de Ahorro (BFA)..

“The rating actions follow our review of the wider implications for economic and industry risks in the Spanish banking sector after our two-notch downgrade of the Kingdon of Spain,” the statement said.

Standard & Poor’s downgraded Spain’s sovereign debt rating last month to BBB-plus which included a negative outlook, saying it expects the Spanish economy to contract further both this year and next.

Bankia, Spain’s fourth-largest and partially nationalised earlier this month, was downgraded from BBB- to BB+. The banks BFA rating was also lowered to B+ from BB-.

The downgrade comes as the board of Bankia was holding a board meeting to make plans for its recapitalisation amid reports that it may be about to ask the government for up to 20 billion euros from the state to stay afloat.

The state took a controlling 45-percent stake in Bankia by converting a loan of 4.465 billion euros to its parent group Banco Financiero de Ahorros (BFA) into equity.

The ratings agency also cut its rating for Banco Popular and Bankinter to BB+ from BBB- and reduced its rating for Banca Civica to BB from BB+.