Moody's downgrades Spanish banks again

The ratings agency Moody's has downgraded by one to four notches the long-term debt and deposit ratings for 28 Spanish banks and two issuer ratings. In a statement published on its website, Moody's said that the actions follow the weakening of the Spanish government's creditworthiness, as captured by Moody's downgrade of Spain's government bond ratings to Baa3 from A3 on 13 June 2012, and the initiation of a review for further downgrade. Moody's added that today's downgrades of the long-term debt and deposit ratings also reflect the lowering of most of these banks' standalone credit assessments. The debt and deposit ratings declined by one notch for three banks, by two notches for 11 banks, by three notches for ten banks and by four notches for six banks. The short-term ratings for 19 banks have also been downgraded between one and two notches, triggered by the long-term ratings changes. Among the downgrades was a cut to Banco Santander. Its long-term rating was cut to Baa2 from A3 and that rating is itself under review for a possible further downgrade. But Moody's kept Santander one notch above the sovereign rating of Baa3, the Moody's release noted, because of the bank's geographic diversity and what it sees as its manageable exposure to Spanish sovereign debt. Santander's UK arm is a standalone business and depositor's money is protected by the Financial Services Compensation Scheme in the UK. Banco Bilbao Vizcaya Agentaria was also among those whose ratings were cut. A cut in an organization's credit rating theoretically makes it more expensive for it to borrow money. Earlier on Monday Spain formally asked for money to help support its banks after an independent audit of Spain's banks last week found that they will need up to 62 billion euros in extra funding. European authorities had already agreed to provide up to 100 billion euros ahead of assessments of the banks' needs.