Bloomberg News

Espirito Santo Among Five Portugal Lenders Cut by Moody’s

March 29, 2012

Banco Espirito Santo SA (BES) was among five banks in Portugal to have credit ratings cut by Moody’s Investors Service, which cited asset risks and a “poor economic outlook” in a nation whose own grade was reduced last month.

Espirito Santo, Portugal’s largest publicly traded bank by market value, had its debt rating lowered one level to Ba3, Moody’s said yesterday in a statement. It took the same action for Caixa Geral de Depositos SA and Banco BPI SA. (BPI) Banco Internacional do Funchal was downgraded to B1 from Ba3.

Portugal was among six European nations, along with Spain and Italy, to have debt ratings cut by Moody’s Feb. 13 as the region’s government-debt crisis spurs austerity programs that may undermine growth. Yesterday’s moves give the four banks grades on par with or lower than Portugal’s, which fell to Ba3 from Ba2. Banco Santander Totta SA, the Portuguese unit of Spain’s largest lender, was cut two levels to Ba1 from Baa2.

Downgrades of the nation’s lenders were generally driven by “expected further deterioration of banks’ domestic asset quality” and firms’ prolonged difficulty accessing private wholesale funding sources, Moody’s said in the statement. “While none of these pressures are new, in Moody’s view they continue to mount against the backdrop of the ongoing euro debt crisis.”

Moody’s report shows that Santander Totta, whose new credit rating is the highest of the five lenders, “continues to display the strongest financial indicators within the Portuguese banking sector,” Cristina Dias Neves, a spokeswoman for the Lisbon-based lender, said in an e-mail.

None of the other four banks returned e-mailed requests for comment on the downgrades.

To contact the reporter on this story: Patrick Clark in New York at pclark48@bloomberg.net

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net


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