Pressure continues to mount on European banks as the credit rating agency Moody’s downgraded several of Spain’s largest financial institutions. Moody’s cut the ratings by one notch on five banks, including Santander and BBVA, the country’s biggest banks by market capitalization. The others include La Caixa, CaixBank, and Confederación Española de Cajas de Ahorros, or CECA. All the banks have been placed on negative outlook. The news comes two days after Moody’s downgraded Spain’s sovereign debt by two notches to A1 from Aa2 with a negative outlook. The Spanish banks are the most recent in a number of European financial institutions that have received downgrades from the major credit ratings agencies. On Oct. 13, Fitch downgraded Britain’s partly nationalized Lloyds Banking Group and Royal Bank of Scotland, as well as the Swiss financial giant UBS, on fears about the deteriorating prospects for the European economy. Euro banks are struggling under the growing sovereign debt crisis. According to PricewaterhouseCoopers, the nonperforming loans at Western European banks increased by 15% last year, which equates to roughly an extra $138bn. The company also estimates that major European banks have $1.8tn of noncore loan assets that need to be sold over the next decade. [Dealbook, 10/20/11]