|S&P cuts ratings on 15 Spanish banks||
Ratings agency Standard & Poor’s has cut the rating of 15 of Spain’s banks, including the two largest Santander and BBVA, euronews reported.
Tuesday’s move came after Friday’s downgrade of the country’s sovereign debt rating to almost junk level with a negative outlook, and as investors wait for Madrid to request a bailout.
The bursting of the property bubble and a prolonged recession mean Spain’s banks face a capital shortfall of 59.3 billion euros according to a recent independent audit.
S&P said it expected to conclude its review of the wider implications of the sovereign downgrade on the banks’ ratings in November.
Madrid has been offered a credit line of up to 100 billion euros to help recapitalize its banks, though has said it will only need around 40 billion euros of that.
The Spanish economy, the fourth-largest in the 17-nation eurozone, is suffering from the aftershocks of a real estate bust that has devastated not just banks but families as well.
Battered by the global financial downturn, the Spanish economy collapsed into recession in the second half of 2008, taking with it millions of jobs. Unemployment is approaching 25 percent.
The worsening eurozone debt crisis has increased Spain's financing costs and the country is seeking a European Union bailout similar to the one Greece received.
On June 9, eurozone finance ministers agreed to lend 100 billion euros to Spain to save its teetering banks, which means more debt will be added to Madrid's already massive debt burden.
Economists say Spain has entered into a second recession. The country has imposed unpopular austerity measures and economic reforms in an effort to persuade its lenders that it is serious about decreasing its overblown deficit to 6.3 percent of gross domestic product in 2012 and 4.5 percent in 2013.
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