Ratings agency Moody’s has put eight Spanish banks on review for a possible downgrade after concerns about Spain’s economy and its commercial property market grew.
The banks put under review are mainly regional lenders exposed to the country’s faltering commercial real estate market.
Banco Cooperativo; Banco de Sabadell; Bankia and its holding company, Banco Financiero y de Ahorro; Bankinter, CaixaBank and holding company La Caixa; Confederacion Espanola de Cajas de Ahorro, or CECA; Caja Rural de Granada; Ibercaja Banco SA; and Lico Leasing were all put under negative review.
"Significant doubts persist regarding real-estate valuations and the adequacy of impairments and provisions taken so far by many banks," analysts from Moody's wrote in a statement.
Spanish banking stocks fell Tuesday morning following the announcement.
Italian and Spanish borrowing costs have risen this week ahead of bond auctions later in the week. The rise in yields signals a lack of market confidence in the new euro zone deal announced last week.
Moody’s recently downgraded Spain’s government bond ratings to A1 from Aa2, and slashed its growth forecast for Spanish gross domestic product (GDP) in 2012 to 1 percent from 2 percent. "Weaker earnings imply a further reduced capacity to strengthen provisions or capital," Moody's said.
While Spain has recently ushered in a new, conservative government, doubts remain about how much change it can achieve without action in the entire euro zone.