Moody's downgrades Banco Santander
Moody's Investors Service lowered its rating Monday on Banco Santander, one of Spain's largest banks, as part of sweeping downgrades for that country's financial institutions.
The agency cut the ratings of 28 Spanish banks, saying the weakening condition of Spain's government finances is making it more difficult for the country to help its lenders. Moody's also said the banks are vulnerable to losses from real estate.
Moody's lowered its long-term debt rating on Banco Santander two notches from "A3" to "Baa2," keeping the bank in investment-grade territory.
Moody's gave the bank a negative outlook, but the ratings are higher than Moody's gave many other Spanish financial institutions. It cited the strength of Banco Santander's broader market and its sources of income.
The downgrades came after Spain's government formally requested help from the rest of the European Union in bolstering its stricken banking sector. Many questions remain unanswered, including how much of a possible $125 billion loan package Spain would seek.
That uncertainty weighed on stock markets in Europe and the U.S. on Monday, and Spain's borrowing costs rose as investors lost confidence that the country can support its banks.
Fitch Ratings downgraded Banco Santander June 11 following a downgrade of Spain's sovereign debt and a forecast that the country's economy will remain in recession through 2013.