Spanish banks seek bail-out as Moody’s mulls downgrade

By MARTIN FLANAGAN
Published on 26/06/2012 00:00

SPAin’s banks were on the brink of a major credit ratings agency downgrade last night as the government formally requested European Union aid for the debt-laden sector.

Moody’s was said to be putting the final touches to a harsher credit rating of the banks, which follows a 13 June downgrade by the agency of Spain’s sovereign debt rating by three notches.

Luis de Guindos, the Spanish economy minister, in a letter to Jean-Claude Juncker, chairman of the Eurogroup of eurozone finance ministers, said he wanted to take up the EU offer of up to €100 billion (£80bn) and hoped to finalise the package by 9 July.

Spanish banking stocks in Madrid fell over 2.5 per cent in afternoon trading as fresh investor nerves took hold, Spain’s Ibex index falling 4 per cent on the Moody’s report.

Cyprus has also told the European authorities that it intends to apply for financial assistance, the fifth eurozone member to do so.

It said it needs help to shore up its banks, which are heavily exposed to the Greek economy.