Fitch Ratings downgraded four banks in Spain Monday as a result of its downgrade of that nation's credit rating.
The downgrade of Spain's debt last month will weaken the government's ability to support its largest banks, Fitch said in a statement. That makes those banks' debt more risky. At the same time, a weak real estate market and economy will also depress the values of assets held by the banks, Fitch said.
Fitch cut its long-term debt rating on the major banks, which are: Banco Bilbao Vizcaya Argentaria, Bankia S.A., CaixaBank S.A. and Caja de Ahorros y Pensiones de Barcelona.
While the Spanish government might have been weakened by the downgrade, Fitch said it is still confident that Spain will try to support the banks if they get into trouble.
The downgrade means three of the banks were removed from their negative rating watch and assigned outlook ratings. Fitch said its outlook is "Negative" on Banco Bilbao Vizcaya Argentaria and CaixaBank. Its outlook is "Stable" on Bankia.
Caja de Ahorros y Pensiones de Barcelona wasn't assigned an outlook because it is still on credit watch.
Fitch downgraded Banco Bilbao Vizcaya Argentaria to `A' from `A+'. It downgraded Bankia to `BBB+' from `A-'. CaixaBank was downgraded to `A-' from `A' and Caja de Ahorros y Pensiones de Barcelona was downgraded to `A-' from `A'.
Fitch painted a gloomy picture of Spain's economy, which the ratings agency said will likely drag down the banks' profitability. Fitch said it expects no GDP growth in Spain this year, and 1 percent growth in 2013. The unemployment rate will remain around 23 percent and the real estate market will be "a long-term cause for concern," Fitch said.
Gov. Kasich Signs Pro-Life Budget That Helps Pregnancy Centers, Could Close Abortion Facilities | Leah Barkoukis
Terrific: Attorney In Charge of Releasing Lois Lerner "Lost" Emails Now In Charge of Hillary Clinton's Emails | Katie Pavlich