Moody’s cuts 16 banks in Spain

Moody’s Investors Service cut the long-term debt and deposit ratings of 16 Spanish banks yesterdays, including Banco Santander, the eurozone’s largest, saying the government’s ability to support some banks had weakened.

All the institutions named were downgraded by at least one notch, while some suffered cuts of up to three notches.

Moody’s cut Santander’s bank financial strength rating and standalone credit assessment by two notches to C/A3 from B-/A1. BBVA, Spain’s second largest lender, saw its ratings cut to A3/C/A3, with a negative outlook.

Spain’s banks, saddled with bad loans after a real estate boom went bust, are at the heart of the eurozone debt crisis because markets fear a state bailout would put a severe strain on the country’s already stretched public finances.

Meanwhile, the Spanish government denied a newspaper report yesterday that customers had withdrawn more than €1bn from the partly nationalised lender, Bankia, over the past week.

Bankia itself said deposit activity was normal, but the government’s denial helped its shares to recoup some heavy losses which had accelerated yesterday.

Economy secretary Fernando Jimenez Latorre denied a deposit flight was under way at a news conference. “It’s not true there is an exit of deposits at this moment from Bankia.” — Reuters

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