Fitch Ratings downgraded more than 20 European banks, including Deutsche Bank AG, Commerzbank AG and Banca Monte dei Paschi di Siena SpA, saying their governments are less likely to provide aid in a crisis.
Five Spanish, four Italian, four Portuguese, four Irish and four Austrian banks are among the lenders whose debt ratings were cut, along with Germany’s two biggest lenders and Royal Bank of Scotland Group Plc, Fitch said in separate statements Tuesday. Fitch said in December it expected to downgrade about 50 euro-region banks in the first half of 2015.
Policy makers want failing banks to be wound down by tapping investors, rather than governments, after the European Central Bank took charge of the euro region’s 120 largest lenders last year. In Spain, the 2012 near collapse of Bankia SA, which was also downgraded today, cost taxpayers about 22 billion euros ($24.5 billion) and forced the government to seek more than 40 billion euros of European funds.
“Fitch believes legislative, regulatory and policy initiatives have substantially reduced the likelihood of sovereign support for U.S., Swiss and European Union commercial banks,” the company said.
RBS also had its rating cut as Fitch said sovereign support for U.K. banks has also been reduced, “in line with developments at the EU level.”
Fitch’s downgrades follow a similar move from Standard & Poor’s in February, which cited the prospects for less state aid in a crisis as it cut the ratings of six European banks, including Credit Suisse Group AG and HSBC Holdings Plc.
European banks are boosting capital buffers to make them more resilient in future financial crises. Lenders are expected to have a fully loaded common equity Tier 1 ratio, a measure of financial strength, of at least 8.5 percent by 2019.