Moody’s Warns Spain It Will Downgrade “More Than 21” Spanish Banks – Expansion

It was such a promising morning for Spain which sold some €2.5 billion in 2015 and 2016 bonds earlier in yet another meaningless and symbolic LTRO-covered exercise, when things went from bad (bank run, pardon, withdrawal meme) to worse, as local Expansion newspaper says Spanish bank ratings will be downgraded in a few hours.

Google translated:

The rating agency Moody’s announced this morning that the Spanish bank announced in the next 12 hours, as by law, a reduction in its credit rating could affect more than 21 entities. According to several sources, the statement will be released expected at nine in the evening.

As Standard & Poor’s for two weeks, the reduction occurs automatically as a result of the downgrading of the debt of the Kingdom of Spain and not motivated by the dynamics of each of the entities. It is a performance similar to that made ??Moody’s with Italian banks .

Among the arguments of the cut score are the adverse conditions facing the banking business in a macroeconomic environment of recession and the rapid deterioration that is suffering the delay.

Furthermore, for months are not entities access to capital markets, although they have settled their funding through the open bar of liquidity.

The action by Moody’s is the result of a process initiated in February 2012 when he decided to check the creditworthiness of all European banks to “the adverse and prolonged effect of the crisis in the euro area and the deterioration in the rating of several European governments “. On Tuesday, Moody’s downgraded the rating to 26 Italian banks , a move not sitting very well in the sector and have described as “irresponsible” given the current situation.

The decrease in the rating of Spanish banks comes at a delicate moment, just after the Government has announced the partial nationalization of Bankia and a new decree to require institutions increased provisions for possible losses in real estate.

In addition, Standard & Poor’s and dealt a blow to Spanish banks two weeks ago and left several of them in junk bond levels. And back again threatens to rule later this month.

Analysts at Moody’s published this week a report indicating that Spanish banks “are vulnerable to the recession and the continuing housing crisis. The problem loans and losses will continue to grow, including categories such as residential mortgage loans, loans SMEs and consumer finance segments not covered by the recent royal decree. The vulnerability of banks to these adverse conditions is a factor in revising the rating of many Spanish banks. ”

 Moody’s to announce action on 21 Spanish banks
• Spain sees borrowing costs rise sharply at auction
• Cameron: it’s “make or break” for the euro
• Greek euro exit looms closer as banks crumble
• FTSE 100 on course for fourth day of losses
• €1bn pulled from Spanish bank Bankia: reports


13.59 Bankia’s chairman, Jose Ignacio Goirigolzarri, has said that depositors can remain “absolutely calm”. And Bankia comes back another couple of percent, now down only 11.3pc

13.50 There are protests in Frankfurt today, with the banners below calling for a rejection of the EU fiscal agreement. A loose collection of protesters from different groups have formed a “blockupy” camp that aims to bring Frankfurt’s banking district to a standstill.

13.35 It seems that when Fernando Jiménez Latorre speaks onBankia, people listen. It’s been a volatile day for the lender’s shares, but since Spain’s economy secretary denied reports of a run on the bank the share price has pared its losses. It’s still down 12.3pc on the day, so hardly a great performance, but certainly progress from its -29pc low this morning.


13.24 Despite reports today that €1bn had been pulled from Bankia by its customers, Spain’s economy secretary Fernando Jiménez Latorredenies that the lender is suffering a run.

QuoteIt’s not true that there is an exit of deposits at this moment from Bankia.

He added that Bankia has everything it requires to become a success in the future – it just needs time.

– ZH