Spanish banks downgraded by S&P and Fitch

Standard & Poor’s and Fitch have downgraded a raft of Spanish banks, citing a deteriorating outlook for the Spanish economy.

S&P has downgraded 10 financial institutions, including the two largest banks, Santander and BBVA, while Fitch has downgraded six banks on the back of downgrading the Spanish economy last week.

S&P said the action resulted from the “tougher-than-anticipated macroeconomic and financial environment in Spain”.

The rating agency also banks would continue to be affected by problems in the Spanish economy for the next 15-18 months.

S&P says: “In our view, 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.”

Fitch also downgraded Santander and BBVA as part of the bank downgrades. Santander was downgraded by one notch to AA-, while BBVA was downgraded one notch to A+.

Ratings agency have been cutting bank ratings across Europe due to fears over the current debt crisis. Last week, Moody’s downgraded 12 UK financial institutions.