Fitch cuts ratings for 18 Spanish banks

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"The institutions affected¹ by today's rating actions are purely² domestic banks. Thus, their revenue generation capacity, risk profile, funding access and cost of funding are highly sensitive to the evolution of Spain's economy and its housing market," Fitch said in a statement.

The decision came after the ratings agency slashed³ Spain's sovereign debt rating by three notches⁴ last week to BBB and downgraded the country's two biggest banks Santander and BBVA on Monday.

Santander and BBVA are the most solvent⁵ banks in the country at the moment. They have been qualified⁶ by the International Monetary⁷ Fund (IMF) as the banks that could resist a worsening of the economic situation in Spain.

Spain would not achieve its budget deficit⁸ goals in 2012 and 2013 and the Spanish economy would remain in recession this year and in 2013, Fitch said.

Last Saturday, the Spanish government decided⁹ to ask for a bailout for its banking¹⁰ system which could reach up to 100 billion euros (about 125 billion U.S. dollars).

However, the Spanish stock market so far has not registered good results.

Uncertainty¹¹ still puts pressure on the IBEX-35 stock market in Madrid, where the risk premium¹² passed the 500-point mark on Tuesday and the interest rate on the Spanish 10-year-bond reached 6.8 percent, the highest level since the country started to use euro.

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