Spanish Business News

Bank of Spain Governor Miguel Angel Fernandez Ordonez said Portugal is “not very important” for Spanish banks as investors increase bets the country will have to seek a European bailout.

“The issue of Portugal is important for Spain, not so much for the banks fortunately, unlike other countries which have Portuguese risk on their balance sheets,” Ordonez told reporters today in Madrid. “What Spain has are banks there, which finance themselves internally. So for the banking sector, it’s not very important.”

Portugal’s government is fighting growing speculation that it will be forced to seek a European bailout. The country’s credit rating was cut by Moody’s Investors Service for the second time in three weeks today, and the ratings company said it expected the government that emerges from the June 5 elections to trigger the European Union’s rescue facility.

Spain, Germany, France and the U.K. have the biggest investments in Portugal, according to the Bank for International Settlements, and Banco Santander SA, Spain’s biggest lender, owns Portugal’s fourth-largest bank. Spain has foreign claims amounting to $85 billion in Portugal, according to data from the Basel-based BIS.

Source: Bloomberg