MADRID (AFP) ― Fitch Ratings downgraded 18 Spanish banks on Tuesday, twisting the knife on a country being pummelled on the financial markets despite a massive banking bailout.

Fitch, which slashed Spain’s sovereign debt rating by three notches last week to “BBB” and downgraded the two biggest banks Santander and BBVA on Monday, warned that some banks’ loan books could weaken.

“This is particularly true for those banks whose loan books are heavily exposed to the construction and real estate sectors, and those with low equity bases,” it warned.

The agency said it examined the banks’ ability to repay debts in the light of a possible further deterioration in real estate assets, the need for banking support in the past year, and the eurozone crisis. “The crisis has contributed to heightened market risk aversion over Spanish debt, affecting funding access and costs for all Spanish banks,” the credit rating group said.

Spain’s 10-year government bond yield spiked to 6.834 percent Tuesday, the highest since the creation of the euro. It is a funding cost widely regarded as unsustainable for the state over the longer term.

On Saturday, eurozone finance ministers agreed to loan Spain up to 100 billion euros ($125 billion) to rescue its banks, heavily exposed to a real estate sector that collapsed in 2008.

Investors worried about the the loan’s impact on Spain’s mushrooming debt; the risk that Spain would need more money both for the banks’ and the state’s finances; and the possibility that official creditors would take priority over private investors in case of a default, analysts said.

Fitch said the agreement on a bailout loan for Spain’s banks did not change its assessment.

“The recent downgrade of Spain’s sovereign ratings by three notches already factors in the likely fiscal cost of restructuring and recapitalising the Spanish banking sector,” it said.

The credit assessor has estimated the banking sector’s needs at 50-60 billion euros under a base case and up to 100 billion euros in a scenario of high financial stress.

Among the 18 banks was CaixaBank, the third biggest Spanish bank in terms of market capitalisation, which was downgraded two notches to “BBB.”

Bankia, which is to receive 23.5 billion euros in public aid, was cut one notch and is now also at “BBB.”

Fitch singled out two worrisome banks. “Fitch is concerned about the relatively high real estate risk exposures and tight capital ratios at Banco Mare Nostrum and Liberbank,” it said.

Both banks’ ratings were trimmed to “BBB-“ ― one notch above junk bond status ― and left on review for a possible downgrade ”in the short term“, the agency said.

On Monday, Fitch said it had downgraded Santander and BBVA to “BBB+” from “A,” placing them just three levels above junk territory but one notch above Spain itself.