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12 Jun, 2012 19:33

Spanish banks downgraded as country awaits rescue package

Fitch credit agency has downgraded 18 Spanish banks less than a week after downgrading the country’s credit ratings. This comes amid discrepancies regarding the rescue package EU is to provide for Spain.

The agency’s decision stipulated the highest borrowing rate in the country since it joined the eurozone. Fitch also said it had carried out stress tests, both on the Spanish banking sector as a whole and on individual banks, updating the test results from 2011.According to Fitch the capital needs of Spanish banks is as much as €60 billion under a “base case” scenario. Meanwhile, Spain has applied for a European bailout of as much as €100 billion to support ailing lenders and eurozone finance ministers have agreed to provide this package. The exact amount of the loan will be determined later this month after independent audits are completed.Spanish authorities claim that the package is to be provided with no additional conditions imposed on the Spanish economy. Some, however, refuse to believe this, saying that if it is true, it will outrage Greece, Portugal and Ireland, who had to make drastic cuts to receive their bailouts.John Hulsman, a political risk consultant, told RT that such assertions make Spanish PM Mariano Rajoy look either like “a fool or a liar.”“The problem is, if you buy the Spanish prime minister Mr. Rajoy`s narrative, of course everyone is going to say why do we have tough terms and Spanish have easy terms and it leads to even more acrimony in the EU.”