Spanish banks on downgrade watch

MOODY’S has placed eight Spanish banks on review for possible downgrade, in light of a worse than expected economic outlook and exposure to real estate.

The ratings agency said 21 financial institutions have also had their ratings cut after a review of systemic support.

And it warned yesterday that more Eurozone banks and governments may have their credit ratings cut if they do not find a solution to the sovereign debt crisis soon.

Moody’s said the communiqué issued by European leaders on Friday contained little substance.

“Risks to the cohesion of the Eurozone continue to rise,” the agency’s report read.

“Adverse economic conditions” are becoming more likely the longer any solution is postponed for, and “would add to the already sizeable challenges facing the authorities’ coordination and debt reduction efforts.”

Ratings will be revised in the coming weeks and months “in the absence of any decisive policy initiatives that stabilise credit market conditions effectively.”

governments and banks crisis soon, ratings agency Moody’s warned yesterday, following Standard and Poor’s decision to place all triple-A rated Eurozone sovereigns on downgrade watch last week.