Moody's downgrades 25 Spanish banks and puts Banco Santander under review

City A.M. Reporter
MOODY&rsquo;S yesterday cut the senior ratings of 25 Spanish banks, citing expectations of further capital pressures.<br /><br />And Banco Santander remains under review for possible downgrade, the ratings agency said.&nbsp;<br /><br />As well as broader economic pressures, the banks&rsquo; asset quality indicators continue to point towards a further significant deterioration, Moody&rsquo;s said.<br /><br />The non-performing loan rate had deteriorated to 4.27 per cent at the end of the first quarter of 2009, up from 0.9 per cent in December 2007 and 3.37 per cent in December 2008.<br /><br />&ldquo;The extra cushion that banks had built up over the years against such risks -- which has so far protected their earnings and capital bases -- is becoming increasingly thin,&rdquo; said Moody&rsquo;s analyst Maria Jose Mori.<br /><br />Moody&rsquo;s cut the ratings of 18 banks by one notch and seven others by two notches after launching a review ofthe sector last month. The downgrades were moderate due to expectations that the government would offer support if necessary.