Moody's cuts Spanish banks

RATINGS agency Moody's downgraded 30 Spanish banks yesterday, citing a combination of pressure on the country's sovereign debt and declining market share of smaller banks as the financial sector consolidates.

The cut in ratings of the banks followed the downgrade of Spain sovereign debt rating on March 10 by the agency to Aa2, but left unchanged ratings at the largest banks Santander, BBVA and savings bank La Caixa.

The Moody's downgrade coincided with a growing crisis in neighbouring Portugal where the prime minister resigned on Wednesday after failing to win approval for austerity measures, but analysts see little effect on Spain for now.

Spain's banks are seen as a liability for the government's fiscal stability and economists estimate they could need a bailout for as much as 100 billion euros because of high exposure to the collapsed construction sector.