Moody's Downgrades 16 Spanish Banks
red bottom shoesMoody's Investors Service on Thursday downgraded 16 Spanish banks, citing rising loan defaults, a renewed recession in Spain, restricted funding access and the reduced ability of the Spanish government to support lenders.The rating agency's decision adds to fears about the health of the financial system in Europe and comes amid rising concerns about a potential exit of Greece from the eurozone.Moody's said it has downgraded the long-term debt as well as deposit ratings for 16 lenders, including Spain's two largest banks Banco Santander SA (STD) and Banco Bilbao Vizcaya Argentaria SA (BBVA), by one to three notches.The ratings agency also downgraded Santander UK PLC, a UK-based subsidiary of Banco Santander.Moody's said, "The Spanish economy has fallen back into recession in first-quarter 2012, and Moody's does not expect conditions to improve during 2012. Moreover, the real-estate crisis that began in 2008 is ongoing, and unemployment has risen to very high levels."In addition, Moody's noted that asset-quality has deteriorated, with non-performing loans to real-estate companies rising rapidly while other loan categories are expected to deteriorate.Moody's also cited restricted market funding access, with the ongoing euro area debt crisis contributing to persistent investor concerns about Spanish banks and Spain's sovereign creditworthiness.The ratings agency lowered the debt and deposit ratings for five banks by one notch, for three banks by two notches and for nine banks by three notches. The short-term ratings for 13 banks were downgraded between one and two notches, triggered by the long-term ratings changes.
red bottom heelsMoody's said the outlook for ten of the downgraded banks are now negative, while the ratings for the remaining seven banks remain on review for further downgrade.Santander and BBVA were both downgraded by Moody's to A3, the same as the Spanish government's rating. In addition, Banco Espanol de Credito, Unicaja Banco SA and Banco Popular Espanol were also downgraded to A3. Moody's downgraded Santander UK by one notch to A2.Moody's had downgraded Spain's sovereign rating by two notches to A3 in February. Earlier this week, Moody's downgraded 26 Italian banks after lowering the credit ratings of Italy by a notch in mid-February.Concerns over a deepening recession and weakness in the banking sector coupled with fears about Greece exiting the euro area triggered a sharp increase in Spain's borrowing costs at a short-term debt auction held on Thursday.Spain is struggling to fix a crisis in its banking sector, which is now undermining hopes of a recovery in the recession-hit nation. The country has the highest unemployment rate in the 17-nation bloc.The Spanish economy shrank 0.3 percent in the first quarter of 2012 as well as the final three months of last year, implying a technical recession. The European Commission has forecast Spain to contract 1.8 percent this year and 0.3 percent in 2013. Revenue gains at its Old Navy, Gap and Banana Republic chains and online helped clothing seller Gap Inc. overcome rising costs and post first-quarter net income on Thursday that was unchanged from a year earlier.The company raised its guidance for the year, and its shares climbed after hours.Gap has struggled for years to reclaim its status as a fashion leader, but the results show that it's starting to get back its fashion groove and draw more people to shop in its stores. The company stepped up its marketing and pushed colorful trendy clothing, from brightly colored jeans to stylish T-shirts."During the quarter, we improved sales, grew earnings per share and continued investing in the business to drive performance," said CEO Glenn Murphy.
red sole shoesBut Murphy was cautious during a conference call with investors following the report's release."While it's nice to celebrate this small win in the first quarter, it's a long year," Murphy said. "We have a lot of initiatives in place."Gap said its net income was $233 million, or 47 cents per share, for the period that ended April 28. That includes a benefit of a penny per share related to reassessing its tax position, Gap said.Analysts on average forecast earnings of 46 cents per share, according to FactSet. Gap's earnings rose on a per-share basis, even though its net income was flat, because the company had 16 percent fewer shares outstanding.Gap first announced its quarterly revenue earlier this month. It rose 6 percent to $3.49 billion, topping analysts' average forecast for $3.46 billion.The company said its revenue from stores open at least a year, an important gauge of retailers' health, rose 4 percent. The comparison is considered key because it isn't skewed by results from stores that open or close during the year.The measure rose 5 percent at Gap and Banana Republic stores in North America and 4 percent at Old Navy stores in North America. It fell 4 percent at international stores, though total overseas revenue rose 13 percent to $511 million.Online revenue rose 18 percent to $410 million, the company said.Standouts in the effort to design fashions to resonate better with shoppers included a Gap Kids partnership with Diane Von Furstenberg and Banana Republic's partnership with AMC's hit show "Mad Men." Also luring shoppers was Gap's colorful clothing.Gap has made major staff changes. Last month, it named Stef Larsson, former head of global sales for H&M, as president of the Old Navy brand. He'll start by the end of October, replacing Tom Wyatt, who resigned in February.The company already had brought back Tracy Gardner as creative adviser. She's expected to make an imprint on holiday fashions, executives said during the call.
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