Back in October, two of the leading credit rating agencies, S&P and Fitch, downgraded the rating of ten financial institutions. those ten institutions include Santander and BBVA, two of countries largest banks. Ratings agencies were downgrading banks all over the European Union during the debt crisis. Spanish banks were targeted in particular this week in October, as the financial environment in Spain is tougher than most companies anticipated.[1] One of the ratings agencies said Spain’s economy faces dimming growth in the near future. Meanwhile, the real estate market remains depressed and turbulence in the capital markets is peaking.
Banks are expected to continue to feel the effects of the imbalances in the Spanish economy for the next 15-18 months. Rating agency Fitch said, “Spain's high underlying budget deficit and its fragile economic recovery made the country especially vulnerable to external shocks.”1 The greatest external shock being the situation in Greece. The entire EU was effected by Greece, but apparently Spain in particular. The economic situation in Spain does not look hopeful. All over the country, families are feeling the effects, including Barcelona. The unemployment rate in Spain is a frightening number and actually on the rise. With the results of the November’s election, hopefully a new government can turn things around in 2012.
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