Fitch credit ratings agency has downgraded Spain's two largest international banks Banco Santander and Banco Bilbao Vizcaya Argentaria (BBVA) from A to triple B plus.
The international credit agency said on Monday that the downgrades were primarily because Spanish sovereign debt ratings had been downgraded to BBB- from A- on June 7 and also due to forecasts that Spain's faltering economy would remain in recession throughout this year and also in 2013.
The downgrades "reflect similar concerns to those that have affected the Spanish sovereign rating, in particular, that Spain is forecasted to remain in recession through the remainder of this year and 2013 compared to the previous expectation that the economy would benefit from a mild recovery," Fitch said in a statement.
The move comes just two days after eurozone finance ministers agreed to help Spain’s troubled banking sector with a 100 billion euros loan.
On Thursday, Fitch downgraded Spain’s long-term foreign and local currency rating by three notches citing the country's banking crisis, mushrooming debt and recession as the main reasons for the downgrade.
Spain’s central bank reported last month that the country's economy will shrink in the second quarter of 2012, with the recession expected to continue until at least mid-2012.
Battered by the global financial downturn, the Spanish economy collapsed into recession in the second half of 2008, taking with it millions of jobs. In May, Spain fell back into recession.
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