Spain sees no need for rescuing lenders

CHICAGO - Agence France Presse

Spanish Prime Minister Rajoy says the country needs no European help for banks. AFP photo

Spanish Prime Minister Mariano Rajoy said May 19 that he did not believe that Spain’s banks would need rescuing by Europe.

“I don’t think so,” Rajoy told journalists after arriving in Chicago to take part in a two-day NATO summit, expressing surprise after French President Francois Hollande said he was favorable to a European mechanism to support the recapitalization of Spanish banks.

“I don’t really know if Mr. Hollande said that, because if he said it must be because Mr. Hollande has information that we don’t have,” he added. Hollande said May 18 that it would be “desirable” for there to be a recapitalization of the Spanish banks.

Moody’s on May 17 cut the debt ratings of 16 Spanish banks by one to three notches, citing the effects of the ongoing recession and the Spanish government’s own reduced creditworthiness.

The leading bank, Santander, and the number two, BBVA, were both hit with three-notch downgrades from Aa3 previously to A3, which for Moody’s is an upper-medium credit grade, with still low credit risk.Two other large banks, Banesto and CaixaBank, were also cut to A3.