The third of the big three credit rating agencies, Moody's, downgraded 12 UK financial firms last week. However, it said the move reflected the fact it believed the UK government was less likely to bail out banks that got into trouble, and not a deterioration in the financial strength of the banking system. Greek hit. Fitch Ratings. These banks were intended to benefit from an Asset Protection Scheme by the Deposit Guarantee Fund -- which is funded by annual contributions from member banks.
However, Moody's assigns a very low probability to the completion of a swift auction process, given the system-wide pressures and the uncertainties regarding the size, terms and schedule of the recapitalisation of the system by the EFSF or ESM.
Furthermore, Moody's has downgraded the issuer ratings of La Caixa and Banco Financiero y de Ahorro BFA , triggered by the downgrade of the debt ratings of their operating companies, CaixaBank and Bankia, respectively. The issuer ratings of La Caixa and BFA are positioned two and three notches, respectively, below the long-term ratings of their operating companies. The issuer rating of La Caixa is on review for downgrade, whilst BFA's is on review direction uncertain.
Both outlooks reflect the outlooks on their operating companies' ratings. The debt ratings of Banco Pastor and Banco CAM incorporate their full ownership by Banco Popular and Banco Sabadell, respectively, and our expectation that their debt will be legally assumed by their owners during the current year as they will cease to exist as independent legal entities. To reflect this situation, Moody's has assigned a very high probability of parental support to these banks' debt ratings.
The review status and outlooks on the debt and deposit ratings of 33 publicly rated institutions are as follows:. Moody's has downgraded the senior subordinated debt and hybrid ratings of 24 Spanish banks in line with the lowering of their standalone credit assessments.
Following the downgrade of the Spanish government's bond rating, Moody's has also downgraded to Baa3, on review for downgrade, from A3, and with a negative outlook the backed senior debt of 17 institutions. The backed-Baa3 ratings assigned are based on the unconditional guarantee, which directly links these ratings to the Spanish government. See "Moody's to assign backed Aaa ratings to new euro-denominated long-term debt securities covered by Spanish government's guarantee," published on 22 January Moody's has downgraded to Baa3, on review for downgrade, from A3 negative outlook all of ICO's rated debt.
Since ICO's liabilities are explicitly, irrevocably, directly and unconditionally guaranteed by the government of Spain, the rating action on ICO is triggered by the three-notch downgrade of the sovereign's ratings.
Downward pressure on Spanish banks' ratings primarily arises from the current review for downgrade process of the Spanish sovereign rating, given the negative implications of the weaker creditworthiness of the sovereign on banks' credit risk profiles.
Upward pressure on the ratings may arise upon the implementation of the government's plan to stabilize the banking system, to the extent that banks' resilience to the challenging prevailing conditions improve. Likewise, any improvement in the standalone strength of banks arising from stronger earnings, improved funding conditions or the work-out of asset-quality challenges could result in rating upgrades.
Please see the Credit Policy page on www. For ratings issued on a support provider, this announcement provides relevant regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides relevant regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating.
The ratings of rated entity Banca March S. Rated entity Banca March S. A its agent s participated in the rating process. This rated entity or its agent s , if any, provided Moody's access to the books, records and other relevant internal documents of the rated entity. The ratings have been disclosed to the rated entities or their designated agent s and issued with no amendment resulting from that disclosure. Information sources used to prepare each of the ratings are the following: parties involved in the ratings, public information, and confidential and proprietary Moody's Investors Service information.
Moody's considers the quality of information available on the rated entities, obligations or credits satisfactory for the purposes of issuing these ratings.
Moody's adopts all necessary measures so that the information it uses in assigning the ratings is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process. Officials said the formal petition would come within days, but did not say what the final figure would be or whether the government would add a security cushion.
Officials hoped that the figures would help calm markets, which responded to the announcement of the bailout two weeks ago by putting further pressure on Spain's state borrowing costs.
Markets had lost confidence in Spain's ability to judge its own banking needs after the two rounds of provisioning ordered so far this year failed to prevent the downfall of Bankia , the country's fourth biggest lender, now part-nationalised. Spain's borrowing costs had been falling in recent days but on Thursday the country still had to pay its highest interest rate for 16 years to raise money over three and five years. The auditors did not produce figures for individual banks, though officials insisted that the study showed that the biggest three lenders — Santander, BBVA and Caixabank — would not need any injection of public capital.
A second group of banks may be able to raise capital themselves or might prefer to ask for bailout money. A third group of lenders is made up of former savings banks, like Bankia, that have already received state support. Analysts welcomed the results, but warned they were based on figures that are already six months out of date, in a country that is now in recession. Economy minister Luis de Guindos, who was in Luxembourg with eurozone colleagues to discuss Spain's request, said a formal application would be made within a few days.
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