Spanish banks downgrades unlikely to affect asset managers

Spain’s financial institutions recovered quickly from their downgrade earlier this week which temporarily sent the country’s bank stocks sharply down as bank shares rose on hopes of an agreement to recapitalise Europe’s troubled banking sector.

The country’s major banks including Banco Santander and BBVA would not comment on the downgrades today (Wednesday 12 October) as it is a national bank holiday, but analysts said the downgrades were unlikely to have much impact on the banks or on their asset management business.

“This had been expected following Spain’s downgrade last week,” said one analyst.

The rating agencies said the latest downgrades reflected the Spanish banks’ high exposure to the real estate sector and the general weakness of the economy.
       
S&P downgraded the ratings of 10 financial institutions, including Santander and BBVA which saw their rating reduced by one notch to AA- from AA.
   
S&P also cut the long-term debt rating of Bankinter, Banco Sabadell, Ibercaja, BBK, La Kutxa and CECA, and placed  the ratings of CaixaBank and Bankia under negative review. The agency also threatened to cut the rating of Banco Popular after the bank announced its planned merger with Banco Pastor.

Fitch said it was cutting the ratings of six banks, after downgrading Spain last week.

S&P said the banks would continue to be affected by imbalances in the Spanish economy for the next 15-18 months. “Spain’s economy faces dimming growth prospects in the near term, real estate market activity remains depressed, and turbulence in the capital markets has heightened,” S&P said in a statement.

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