As expected after Standard & Poor's (S&P) downgraded Spain's credit rating to 'BBB-/A-3', the credit ratings agency has been quick to cut Banco Santander, BBVA and nine other Spanish banks.

The agency explained that "the sovereign downgrade has direct negative rating implications on those banks that we rated higher than the 'BBB-' long-term rating on Spain."

Specifically, S&P brought Santander down two notches from 'A-' to 'BBB' with a negative outlook. The agency downgraded the long-term ratings on 11 banks in total and the short-term ratings on four. Six of them have also had their long-term rating placed on "CreditWatch negative".

The agency noted that it expects to come to a conclusion on those banks with a negative outlook after it has fully reviewed the implications of the sovereign downgrade. S&P foresees making an announcement in November.

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