Banco Espirito Santo SA was among five banks in Portugal to have credit ratings cut by Moody’s Investors Service, which cited asset risks and a “poor economic outlook” in a nation whose own grade was reduced last month.

Espirito Santo, Portugal’s largest publicly traded bank by market value, had its debt rating lowered one level to “Ba3,” Moody’s said Wednesday in a statement. It took the same action for Caixa Geral de Depositos SA and Banco BPI SA. Banco Internacional do Funchal was downgraded to “B1” from “Ba3.”

Portugal was among six European nations, along with Spain and Italy, to have debt ratings cut by Moody’s Feb. 13 as the region’s government-debt crisis spurs austerity programs that may undermine growth. Wednesday’s moves give the four banks grades on par with or lower than Portugal’s, which fell to “Ba3” from “Ba2.” Banco Santander Totta SA, the Portuguese unit of Spain’s largest lender, was cut two levels to “Ba1” from “Baa2.” 

Downgrades of the nation’s lenders were generally driven by “expected further deterioration of banks’ domestic asset quality” and firms’ prolonged difficulty accessing private wholesale funding sources, Moody’s said in the statement. “While none of these pressures are new, in Moody’s view they continue to mount against the backdrop of the ongoing euro debt crisis.”

E-mails sent after regular business hours seeking comment from each of the five banks weren’t returned. 

(Bloomberg)