Fitch today downgraded Spain’s two largest banks, Banco Santander and Banco Bilbao Vizcaya Argentaria (BBVA), by two notches after chopping the country’s sovereign rating last week to just above junk status, Forbes reported.
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The ratings action “reflect similar concerns to those that have affected the Spanish sovereign rating, in particular, that Spain is forecasted to remain in recession through the remainder of this year and 2013 compared to the previous expectation that the economy would benefit from a mild recovery in 2013,” Fitch said in a statement.
According to Agence France-Presse, Fitch cut its rating for Santander and BBVA to BBB+ from A.
The move came after Spain agreed Saturday to an international bailout of up to 100 billion euros ($125 billion) for its debt stricken banking system.
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Financial markets initially welcomed the deal, which is seen as giving European leaders more breathing space to sort out the deepening crisis, but it didn’t take long for investors to start questioning how the bailout would be structured and if it would be enough to resolve’s Spain’s problems.
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Fitch gave both Spanish banks a negative outlook, according to MarketWatch.
The ratings agency noted that while Santander and BBVA’s international operations made them more robust than domestic-focused banks, they were not “entirely immune to global economic trends”.