WASHINGTON: Moody's downgrades the credit ratings of 28 Spanish banks, as Madrid had asked a €100-billion ($125-billion) rescue loan for the banking sector from its Euro Zone partners.
The banks are facing huge losses from commercial real estate loans and that Madrid's own lowered credit grade also contributed to the rating cuts.
The lower creditworthiness of Madrid's not only affects the government's ability to support the banks, but also weighs on banks' stand-alone credit profiles, Moody's said.
Moody's said, however, that it “views positively the broad-based support measures being introduced by the Spanish Government to support the Spanish banking system as a whole’’.
The leading bank, Banco Santander, dropped two notches from A3 to Baa2 - 'medium grade' while the second bank, BBVA, lost three levels from A3 to Baa3.