Bloomberg News

Santander and BBVA Among 11 Spanish Banks Downgraded By S&P

April 30, 2012

A pedestrian walks past a branch of Banco Santander SA, in San Sebastian. Photographer: Markel Redondo/Bloomberg

A pedestrian walks past a branch of Banco Santander SA, in San Sebastian. Photographer: Markel Redondo/Bloomberg

Standard & Poor’s cut its credit ratings for 11 Spanish banks, including Banco Santander SA (SAN) and Banco Bilbao Vizcaya Argentaria SA, citing “potentially negative implications” from the nation’s downgrade last week.

S&P said it may also downgrade six other lenders. Santander, Spain’s biggest bank, had its long-term debt rating cut by two levels to A- from A+, and BBVA (BBVA), the second-largest, had its rating cut to BBB+ from A, the ratings company said in a statement today. The outlook for those ratings is negative.

Spain’s economy shrank 0.3 percent in the first quarter from the fourth quarter, the National Statistics Institute said today. Spain’s sovereign rating was cut on April 26 for the second time this year by S&P, which cited concern that the country will have to provide further fiscal support to banks as the economy contracts.

Spain’s downgrade by two levels to BBB+ from A, with a negative outlook, has “direct negative rating implications” for the banks it rates at or above the sovereign rating, the ratings company said today.

“The factors behind the downgrade of Spain could have potentially negative implications for our view of the economic risk and the industry risk affecting the Spanish banking industry,” S&P said today.

Prime Minister Mariano Rajoy is struggling to convince investors his government can narrow Spain’s budget deficit by 3.2 percentage points of gross domestic product this year as the economy shrinks and unemployment approaches 25 percent.

S&P also downgraded Banco Sabadell SA (SAB), Ibercaja Banco SA, Kutxabank SA, Banca Civica SA (BCIV), Bankinter SA, the Spanish unit of Barclays Plc (BARC) and the Spanish savings bank association. Bankia SA (BKIA), Spain’s third-biggest bank, was placed on “creditwatch with negative implications.”

S&P said it expects to conclude its review of the sovereign downgrade’s effect on banks by the end of May.

To contact the reporter on this story: Charles Penty in Madrid at cpenty@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net


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