Standard & Poor's on Thursday downgraded the ratings of 10 Spanish banks after the agency announced new criteria and methodology in placing scores on financial entities.
The banks include Bankia, Caixabank, Ibercaja, Bankinter, Sabadell and Banco Popular.
S&P said that that the banks remained on watch for a possible further cut subject to a review of Spain's sovereign rating, which is due to take pace in about a month.
Spanish banks are heavily exposed to bad, and potentially bad, loans after a prolonged housing bubble burst in 2007, and risks remain even after prolonged restructuring and recapitalization. Spain's sovereign debt is currently rated AA- by S&P, an investment grade that indicates a "very strong payment capacity." The agency said that after deciding on whether or not to downgrade Spain's government debt, it will announce decisions on possible further cuts in the ratings of Spanish banks.