MADRID: Fitch Ratings downgraded Spain's troubled regional savings banks on Wednesday, a fresh blow for the sector as it fights to restructure following the collapse of a building boom in 2008.
The agency said it downgraded the rating on the Spanish Confederation of Savings Banks (CECA) by two notches from A to BBB+, indicating a heightened risk that their creditworthiness may suffer from worsening economic conditions.
Fitch warned it may further lower the rating, which it had already downgraded by one notch in December.
The move reflects "the higher risk profiles" of the 16 savings banks in the confederation, which were formed in a restructuring launched by the government in 2010 to save Spain's indebted banking sector from collapse.
Despite the banking shake-up, which is continuing under the conservative government that took power in December, credit raters still harbour doubts over the stability of Spain's banks and its broader public finances.
"The significant consolidation of the system has led to higher risk concentration by name and a potential decline in volumes," Fitch said.
"CECA and its associated members are operating in a weak economic environment with muted growth prospects."
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