Moody’s has taken the hatchet to the Spanish banking sector this morning, cutting the ratings of 30 of the country’s banks.Note: This does not include Santander, BBVA, or La Caixa.
Moody’s made the move because they are losing faith in the Spanish sovereign’s ability to stage a full scale bailout of the country’s banking system.
Earlier this month, Moody’s downgraded the Spanish sovereign due to problems in its banking sector. Spain has claimed its banking sector only needs €15.15 billion in cash, while other independent assessments suggest it could be as high as €120 billion.
The cost to the country’s banks is very much dependent on the outlook for its real estate sector. Spain’s unemployment rate remains above 20%, and a ECB rate hike seems imminent, so there’s little reason to think the situation will be improving soon.
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