More downgrades for Spanish banks

Further downgrades for Spanish banks
Further downgrades for Spanish banks

Following Spain’s formal request for assistance Moody’s have downgraded the credit rating on 28 Spanish banks.

Moody’s summarise the downgrades in a press release as follows:

Moody’s Investors Service has today downgraded by one to four notches the long-term debt and deposit ratings for 28 Spanish banks and two issuer ratings.

Today’s actions follow the weakening of the Spanish government’s creditworthiness, as captured by Moody’s downgrade of Spain’s government bond ratings to Baa3 from A3 on 13 June 2012, and the initiation of a review for further downgrade. For more details on the rationale for the sovereign downgrade, please refer to the press release (–PR_248236).

Moody’s adds that today’s downgrades of the long-term debt and deposit ratings also reflect the lowering of most of these banks’ standalone credit assessments.

The debt and deposit ratings declined by one notch for three banks, by two notches for 11 banks, by three notches for ten banks and by four notches for six banks. The short-term ratings for 19 banks have also been downgraded between one and two notches, triggered by the long-term ratings changes.

Today’s actions reflect, to various degrees across these banks, two main drivers:

(i) Moody’s assessment of the reduced creditworthiness of the Spanish sovereign, which not only affects the government’s ability to support the banks, but also weighs on banks’ standalone credit profiles, and

(ii) Moody’s expectation that the banks’ exposures to commercial real estate (CRE) will likely cause higher losses, which might increase the likelihood that these banks will require external support.

This notwithstanding, Moody’s views positively the broad based support measures being introduced by the Spanish government to support the Spanish banking system as a whole. Moody’s will assess the impact of the upcoming recapitalization on banks’ creditworthiness and bondholders once the final amount, timing and form of funds flowing to each individual bank are known.

The ratings of both Banco Santander and Santander Consumer Finance are one notch higher than the sovereign’s rating, due to the high degree of geographical diversification of their balance sheet and income sources, and a manageable level of direct exposure to Spanish sovereign debt relative to their Tier 1 capital, including under stress scenarios. All the rest of the affected banks’ standalone ratings are now at or below Spain’s Baa3 rating.

In addition, Moody’s has also downgraded (i) the ratings for senior subordinated debt and hybrid instruments of affected entities; (ii) all rated government-backed debt issuances from Spanish banks; and (iii) the long-term debt ratings of Instituto de Credito Oficial (ICO), which are based on an unconditional and irrevocable guarantee from the Spanish Government.

Please click this link for the list of Affected Credit Ratings. This list is an integral part of this press release and identifies each affected issuer.

You can see the full press release here: Moody’s downgrades Spanish banks

4 thoughts on “More downgrades for Spanish banks

  1. DQ

    The best advice I can give anyone living in Europe or Amerika, is get an off shore bank account and keep your funds NOT in USD nor EUR. Protect yourself and your assets. Don’t keep all your eggs in one basket!

    You can pay your bills from any bank in the world — debit cards work in most atms across the planet. Get a PRIVATE account that does not report to the country you are a citizen of. Take control of your finances before the governments seize your funds like in Greece — the government is looking for money because they are broke. Don’t leave your funds in the bank for them to take. Hold your funds in more than one currency so that you are leveraged and covered should one fail. You can move fast to exchange out of the failing currency. There are many banks where you can use more than 10 different currencies to hold your funds in.

    Invest in 1 ounce silver and gold bullion coins — easy to use when the SHTF and paper money is worthless.

    And never ever use a bank safety deposit box! That’s just waiting for the government to come in and raid all your valuables.

    All is not lost IF YOU PREPARE. Don’t wait.


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