S&P downgrades 15 Spanish banks, as investors wait for aid request

Ratings agency Standard & Poor’s has cut the rating of 15 Spanish banks, among which Spain’s largest lenders Banco Santander and Banco Bilbao Vizcaya Argentaria SA.

The agency assigned negative outlooks on the long-term ratings of Santander and BBVA, and is expected to review the wider implications of the sovereign downgrade on the banks’ ratings in November.

The decision follows a downgrade announced on October 12 of Spain’s sovereign debt to to BBB-/A-3, just one notch above junk with a negative outlook.

“Investors seek more assurance, especially after S&P cut the long term credit rating of 11 Spanish banks today,” said Dean Popplewell, chief currency strategist at foreign exchange broker Oanda.

He added: “Spain appears to be softening its stance on seeking financial assistance. Everyone realizes that defending Spain is crucial because its economy doubles the output of Greece, Ireland, Portugal and Cyprus combined. Perhaps, finally, we are witnessing the Iberian country’s first details of their plans for support, before its debt problems become wholly uncontrollable.”

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