By Simon Miller

Standard & Poor's has downgraded eight Spanish banks and put three on negative credit watch as the country enters a double-dip recession.

Following it's downgrade of Spain's sovereign debt last week, the ratings agency said the action had a "direct and negative rating implications for the banks whose ratings incorporate uplift over their 'stand-alone credit profiles' (SACP) to reflect Spanish government support".

Among the banks, Banco Santandar saw its short-term rating downgraded to A- from A+ while Barclays Bank SA saw its rating downgrade from A-1 to A. Caixabank and Bankia were placed on negative creditwatch while Banco Popular Espanol remains on negative creditwatch.

In addition, S&P said the factors behind the downgrade of Spain could have "potentially negative implications of the economic risk and industry risk affecting the Spanish banking industry and for our analysis of specific rating factors that drive SACP assessments on Spanish banks".

The agency added: "We expect to conclude our review on the wider implications of the sovereign downgrade on the economic and industry risks for the Spanish banking sector and the Spanish banks we rate by end May. As a result of this process, we expect to either resolve or update the CreditWatch placements."

The actions come after Spain's offical statistics showed the country had offically entered a double-dip recession.

Although less than the 0.4% expected by economists, the first three months of the year saw a 0.3% contraction in the first three months of the year following the 0.3% shrink in Q4 2011.

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