“BBVA, Santander up with the four most solvent European banks”

In a report that analyzed the fifty largest financial groups in Europe, the risk agency Standard & Poor’s (S&P) ranking highlights credit grades awarded to each of them. In the classification, the two Spanish giants BBVA and Santander appear in the top positions.

El Economista informs that

“They occupy third and fourth steps respectively, based on the quality of their rating.”

Of course, both still face the threat of a downgrade if the situation worsens or they carry out any acquisitions.

“S&P places as the most solvent banks the Dutch Rabobank and ranks HSBC in second place. La Caixa appears in twelfth place and Sabadell, Bankia and Popular beyond the thirtieth position.

“For some entities, not only the situation in Europe could cause them problems. Thus, for example, with regards to BBVA, it believes that one of the keys to its future is the development of its franchise in the United States.”

El Economista points out that the agency

“…seems slightly more optimistic about Santander, which offers guarantees due to its high diversification and the purchasing policy it practiced during the crisis. However, it also warns about the consequences that the bank would face if it were to carry out a takeover of significant size. It transmits the same message about Sabadell. S&P says it would have to lower the rating of the Catalan entity if it carried out any corporate operation.”

As for the other three Spanish institutions, the report emphasizes the medium-term strengths of Popular, La Caixa and Bankia. On the latter it maintains the best prospects after its IPO in July and does not rule out even increasing its rating.

“Of course, this action is contingent upon the results obtained as a result of the restructuring process in which they are immersed and the income earned in the future.

“To La Caixa, in turn, it recommends greater geographic diversification with an increase in business abroad, due to the fact that a concentration of activity in Spain could become a burden. As to Popular, it warns of a greater asset deterioration than expected.”

Diversification, by the way, doesn’t sound like an advice without implications on how S&P expects the Spanish overall economy to perform, does it? The report can be downloaded here.

About the Author

The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.

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