Five of the largest banks in Portugal have received credit rating downgrades from a leading agency as political turmoil threatens the stability of the country and could prompt an international bailout, according to Financial Times. On Monday, Standard & Poor’s slashed the long-term credit ratings for Banco Espírito Santo, Banco BPI, Caixa Geral de Depositos, and Banco Santander Totta to BBB, from A-minus for BES, BPI, and CGD, and from A for BST. Millenium BCP was cut from BBB-plus to BBB-minus.
The downgrade reflects the recent political turmoil in the country that led to the two-notch downgrade for Portugal’s long-term sovereign credit rating to BBB last week, and S&P has warned that another downgrade could come “as early as this week.” Elena Iparraguirre of S&P cited the “increasingly difficult economic, financial, and operating environment in Portugal,” for the downgrade, and warned that further economic uncertainty surrounding the country’s political future would “increase the funding difficulties of Portuguese banks.”