S&P cuts Spanish banks

Standard & Poor's said it took various rating actions, including downgrades and CreditWatch placements, on Spanish financial institutions.

The agency said the downgrade of Spain has direct negative rating implications for the banks that are rated higher than the BBB- long-term rating on Spain, and for all banks where the agency factored extraordinary government support into the ratings in the form of uplift over the banks' stand-alone credit profiles.

The agency said it lowered ratings on Banco Bilbao Vizcaya Argentaria SA, CaixaBank SA and its parent company Caja de Ahorros y Pensiones de Barcelona because S&P seldom rates financial institutions above the foreign currency long-term rating on the country where the institutions are domiciled.

The agency also lowered the ratings on Banco Santander SA, and as a result lowered those on its core subsidiary Banco Espanol de Credito SA and its highly strategic subsidiary Santander Consumer Finance SA.

In addition, S&P said it removed the one notch of uplift for extraordinary government support that it previously incorporated into the ratings on Banco de Sabadell SA, Banco Popular Espanol SA, Bankia SA and Banco Financiero y de Ahorros SA, which led the agency to lower its long-term ratings on these entities by one notch.

S&P also placed on CreditWatch negative most of the issuer and issue ratings on Spanish banks that hadn't already been placed on CreditWatch, except those on Banco Santander and its abovementioned subsidiaries, those on Banco Bilbao Vizcaya Argentaria and those on Barclays Bank SA.

The agency said it assigned negative outlooks to the long-term ratings on Banco Santander, Banco Bilbao Vizcaya Argentaria and Barclays Bank SA rather than placing them on CreditWatch negative. For Santander and BBVA, the two largest Spanish banks, this is because S&P thinks it is unlikely that it would lower their stand-alone credit profiles by more than two notches to stand below the current ratings. With regard to BBSA, S&P derives the ratings from those on its parent Barclays Bank plc and caps them at the level of the long-term rating on Spain because the agency views the bank as a highly strategic subsidiary.

The agency lowered the following ratings:

• Banco Bilbao Vizcaya Argentaria SA's counterparty credit ratings to BBB-/Negative/A-3 from BBB+/negative/A-2, its subordinated ratings to BB+ from BBB and its hybrid instrument ratings to BB- from BB+;

• Barclays Bank SA's counterparty credit ratings to BBB-/negative/A-3 from BBB+/negative/A-2;

• Santander Consumer Finance SA's counterparty credit ratings to BBB-/negative/A-3 from BBB+/negative/A-2 and its subordinated ratings to BB+ from BBB;

• Banco Santander SA's long-term counterparty credit rating to BBB/negative from A-/negative, its subordinated rating to BBB- from BBB+ and its hybrid instrument ratings to BB from BBB-;

• Banco Espanol de Credito SA's long-term counterparty credit rating to BBB/negative from A-/negative, its subordinated ratings to BBB- from BBB+ and its hybrid instrument ratings to BB from BBB-;

• Banco Popular Espanol SA's long-term counterparty credit rating to BB/watch negative from BB+/watch negative;

• Bankia SA's long-term counterparty credit rating to BB/watch negative from BB+/watch negative; and

• Banco Financiero y de Ahorros SA's long-term counterparty credit rating to B/watch negative from B+/watch negative.

The following ratings were lowered and placed on CreditWatch:

• CaixaBank SA's long-term counterparty credit rating to BBB-/watch negative from BBB/negative, its short-term counterparty credit rating to A-3/watch negative from A-2 and its hybrid instrument ratings to BB-/watch negative from BB;

• Caja de Ahorros y Pensiones de Barcelona long-term counterparty credit rating to BB/watch negative from BB+/negative and its subordinated ratings to B+/watch negative from BB-; and

• Banco de Sabadell SA long-term counterparty credit rating to BB/watch negative from BB+/negative.

The following ratings were placed on CreditWatch:

• Banco Financiero y de Ahorros SA's short-term counterparty credit rating;

• Kutxabank SA's long-term and short-term counterparty credit ratings;

• Confederacion Espanola de Cajas de Ahorros's long-and short-term counterparty credit ratings;

• Bankinter SA's long-term counterparty credit rating, subordinated ratings and hybrid instrument ratings;

• Banco de Sabadell SA's subordinated ratings and hybrid instrument ratings; and

• Banco Popular Espanol SA's subordinated and hybrid instrument ratings.

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