S&P Downgrades Five Spanish Banks

May 25, 2012 Updated: May 30, 2012

Rating agency Standard & Poor’s sliced the credit ratings of five Spanish banks on Friday, confirming escalating woes in a country that is believed to be entering a double-dip recession.

The firm downgraded by one notch for Banco Popular S.A., Bankia S.A., and Bankinter S.A. from triple-B-minus to double-B-plus. It also lowered the rating for Banca Civica S.A. by two notches to double-B from double-B-plus. It sliced its rating on Banco Financiero y de Ahorros S.A. to B-plus from double-B-minus, a four-notch trim.

The move came a week after rating firm Moody’s Investors Service carried out an across-the-board downgrade of Spain’s banks, citing the government’s weakening ability to support lenders.

On April 30, S&P lowered ratings on 11 Spanish banks, including Spain’s two biggest banks, Santander and Banco Bilbao Vizcaya Argentaria.

Four days before that, S&P sliced its rating on Spain by two notches from single-A to triple-B-plus, just three notches above being considered junk. S&P now has the lowest rating on Spain among the big three rating firms—S&P, Moody’s Investors Service, and Fitch Ratings.

Following the downgrade, Bankia, Spain’s fourth-largest bank, announced that it will requested the Spanish government for 19 billion euros ($24 billion), which would make it the largest bank bailout in the country’s every.

The bank holds about 10 percent of the nation’s bank deposits.

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