S&P downgrades five Portuguese banks
Monday 28 March 2011 - by Andrew Hickley
Standard & Poor's has warned that Portugal could face a further sovereign downgrade this week as it downgraded five of the country's banks.
Banco BPI and its core subsidiary Banco Português de Investimento S.A. have been downgraded to BBB from A-, with Banco Comercial Português falling to BBB- from BBB+.
It notes that banks are rarely rated above the long-term sovereign rating of their home country, which was downgraded on Friday amid fears that an EU bailout was necessary.
The news comes after a member of the European Central Bank's Governing Council yesterday recommended the country take an EU-funded bailout.
Speaking in a television interview Ewald Nowotny also voiced concerns that political troubles could make a bailout unviable in the short-term.
Prime Minister Jose Socrates resigned last week after a fourth round of austerity measures failed to win approval from the minority government.
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