Moody's downgrades more Spanish savings banks

MADRID Aug 5 (Reuters) - Ratings agency Moody's said on Tuesday it had downgraded five more Spanish savings banks because of their exposure to real estate and construction during the country's sharper than expected housing market downturn.

Moody's cut its ratings on the listed bank Caja de Ahorros del Mediterraneo (CAM), as well as on unlisted Caixa Cataluna, Caixa Tarragona, Caixa Terrasa and Bancaja.

In its statement Moody said it continued to believe Spain would undergo an orderly correction in its housing market at the end of a decade-long housing boom which had seen frenetic building especially on the coast.

However, Moody said the correction, coupled with the global credit crunch "is translating into a more severe downturn in the credit cycle for Spain's banking system than initially anticipated".

"The request by Martinsa-Fadesa (Spain's largest real estate developer) to be placed under court-supervised administration has once more highlighted the significant difficulties this sector is going through as well as the vulnerability of Spanish banks to the underperformance of the real estate developers and the risks arising from these exposures," said Moody.

The ratings agency, though, added that the banks had provided exposures, in most cases against excess provisioning, which had had no significant impact on bank earnings.

The ratings cuts come after Moody's put them on review in April when it downgraded a number of other savings banks.

For Moody's full text and ratings, click on [ID: nWNA6563]. (Reporting by Sarah Morris and Clara Vilar; Editing by Greg Mahlich)