Fitch downgrades credit rating for Spain's Santander and BBVA banks
2012-06-12 18:06:47
Ratings agency Fitch on Tuesday downgraded its credit rating for Spain's two largest banks, Santander and BBVA, by two notches to BBB+.
Both Santander and BBVA are now just three levels above junk territory, and both have been given a negative outlook.
The move comes after Fitch downgraded its sovereign rating for Spain last week by three notches.
According to Fitch, their downgrades reflect similar concerns it has over Spain's economy, predicted to remain in recession this year and into next year.
There are also fears that Greece's bank jog could turn into a bank run if the leftist parties opposed to austerity measures get voted into power after elections due on Sunday, and could eventually pave the way for a Greek exit from the eurozone.
Fitch's head of Asia-Pacific ratings Andrew Colquhoun said, "If it were to happen -- we're not saying it will -- at that stage, we would assign a rating watch negative to the 17 eurozone sovereigns.
"The resolution of those rating watches would depend on the policy response both at the European and national level within the eurozone, specifically, how robust the policy response was and whether it was sufficient to prevent contagion from Greece to other peripheral eurozone countries."
Fitch expects Spain to remain in recession through the remainder of this year and in 2013.