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S&P turns on Spain’s banking sector
Standard and Poor’s has cut the ratings of some of the key players in Spain’s banking sector, including Santander and BBVA, the country’s two biggest lenders by assets, following the agency’s decision to cut Spain’s sovereign rating last month.
At the same time Fitch, a separate ratings agency, lowered its ratings for a number of Spanish lenders based on its earlier decision to cut its outlook for the Spanish government’s creditworthiness.
The decision by the ratings agencies comes after Spain’s recently installed conservative government has ushered in a new round of banking sector reforms, included an added €50bn in provisions against soured property loans, and a cap on pay for executives a rescued lenders.
S&P, which lowered Spain’s credit rating from AA minus to A in January, lowered its rating for Santander, the country’s largest by assets, from AA minus to A plus, while BBVA, which ranks second, was cut from A plus to A.
The other 13 lenders suffering the downgrade, which is standard practice after a sovereign rating downgrade based on S&P’s assumption of implicit state support for banks, included Banco Popular, La Caixa and Bankia.
Fitch reduced Santander from AA minus to A, alongside reductions for La Caixa and Bankia.
Spain’s banks have undergone a period of widespread upheaval in the last two years as a binge of lending into an overheated real estate market left many nursing both non-performing loans, and repossessed property and land considered by many analysts to be worth far less than the price it was purchased for.
S&P said it had changed its so-called “anchor rating” applied to banks primarily operating in Spain to BBB minus from BBB.
Last week the agency cut the credit ratings of 34 Italian banks based on the same explanation of having lowered the sovereign credit rating of Italy itself, and concern that its banks could finance themselves considering the difficult conditions facing the country.
Following the most recent round of banking sector reform in Spain, a fresh wave of consolidation is expected by analysts, with banks having been given certain incentives to swallow up smaller rivals by the government, such as delaying the deadline to raise the required level of provisions.
S&P turns on Spain’s banking sector - FT.com
Standard and Poor’s has cut the ratings of some of the key players in Spain’s banking sector, including Santander and BBVA, the country’s two biggest lenders by assets, following the agency’s decision to cut Spain’s sovereign rating last month.
At the same time Fitch, a separate ratings agency, lowered its ratings for a number of Spanish lenders based on its earlier decision to cut its outlook for the Spanish government’s creditworthiness.
The decision by the ratings agencies comes after Spain’s recently installed conservative government has ushered in a new round of banking sector reforms, included an added €50bn in provisions against soured property loans, and a cap on pay for executives a rescued lenders.
S&P, which lowered Spain’s credit rating from AA minus to A in January, lowered its rating for Santander, the country’s largest by assets, from AA minus to A plus, while BBVA, which ranks second, was cut from A plus to A.
The other 13 lenders suffering the downgrade, which is standard practice after a sovereign rating downgrade based on S&P’s assumption of implicit state support for banks, included Banco Popular, La Caixa and Bankia.
Fitch reduced Santander from AA minus to A, alongside reductions for La Caixa and Bankia.
Spain’s banks have undergone a period of widespread upheaval in the last two years as a binge of lending into an overheated real estate market left many nursing both non-performing loans, and repossessed property and land considered by many analysts to be worth far less than the price it was purchased for.
S&P said it had changed its so-called “anchor rating” applied to banks primarily operating in Spain to BBB minus from BBB.
Last week the agency cut the credit ratings of 34 Italian banks based on the same explanation of having lowered the sovereign credit rating of Italy itself, and concern that its banks could finance themselves considering the difficult conditions facing the country.
Following the most recent round of banking sector reform in Spain, a fresh wave of consolidation is expected by analysts, with banks having been given certain incentives to swallow up smaller rivals by the government, such as delaying the deadline to raise the required level of provisions.
S&P turns on Spain’s banking sector - FT.com
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