We now see higher economic risk for banks operating in Spain following the rapid deterioration of the sovereign's creditworthiness, which has been reflected in our rating actions on Spain, including our recent two-notch downgrade. In our view Spanish banks face increased credit risk as Spain's weakening economy, public sector cuts, austerity measures, and high unemployment will likely hamper the creditworthiness and resilience of public and private sector borrowers. Throughout 2012, Bankia's capital and liquidity deteriorated to stretched levels, and recourse to European Central Bank borrowing rose significantly. Higher credit risk could further impair Bankia's deteriorated financial profile. We are keeping our 'BB' long-term rating on Bankia S.A. and our 'B/B' long- and short-term ratings on its parent company Banco Financiero
