PARIS (MNI) - The rating agency Moody's has decided to cut the ratings of Spanish banks by two to three notches and will issue a statement communicating its decision after Wall Street closes, Spain's financial daily Expansion reported on its website Monday, citing Spanish banking sources.
"The communicated to us a downgrade of two to three notches for almost all [banks]. They aren't looking at the financial situations of individual banks. They are not discriminating," the publication cited one source as saying.
According to the report, Moody's is to make the announcement sometime after 2100 GMT/1700 ET today. <= 5pm cdt
The paper noted that normally banks of a given country are automatically downgraded when their sovereigns are, and that they normally have a rating that is inferior to the government's. Because Spain's sovereign rating is currently only one notch above the lower end of the investment grade category, most of the banks are likely to get junk ratings, the report said.
Possible exceptions are Spain's largest banks: Santander, BBVA and CaixaBank, which "could possibly avoid falling to that level," Expansion said.
Moody's downgraded 16 Spanish banks by one to three notches on May 17, following its downgrade of Spanish sovereign debt a few days earlier. Last week, Moody's downgraded 15 large banks worldwide, citing their elevated exposure to trading in global markets.
Earlier today, Spain's Economy Minister Luis de Guindos formally requested recapitalization aid for Spain's banks in a letter to Eurogroup President Jean-Claude Juncker. The aid request was expected after the Eurogroup said earlier this month that it would make up to E100 billion available for Spanish banks to recapitalize -- money that would be loaned via a government entity and thus add to Spain's mounting debt load.