LOS ANGELES, CA (Catholic Online) - The event makes it the largest bank bailout in Spain's history. Combined with escalating concerns that Greece is about to execute its so-called Grexit from the euro currency, the recent development has only heightened anxiety in the euro zone.

Sending shockwaves last summer when it downgraded U.S. debt, Standard & Poor says the Spanish banking sector was vulnerable to turbulence in capital markets because it relies heavily on foreign funding.

Bankia, Bankinter and Banco Popular Espanol were pitched by Standard & Poor into junk status, all with a BB+ score. Banca Civica and Bankia's parent company, Baco Financiero y de Ahorros, were also lowered.

S&P downgraded ratings on 11 Spanish banks in late April, not long before Moody's did the same to 16 banks in the embattled country.

Standard & Poor's main concern is "that the correction of the economic imbalances accumulated during the boom is still underway and will have a very high impact on the financial system."

With real estate week and private companies paying down debt rather than expanding, Spain's growth potential will suffer.

Spain agreed to nationalize Bankia earlier this month, after top-level turmoil. The BFA-Bankia Group, now citing fears of "potential deterioration of the macroeconomic environment," will restructure and recapitalize.

"Bankia's customers can be absolutely certain that their savings are safer and more secure than ever," Chairman José Ignacio Goirigolzarri said in a statement.

Economic forecasts remain gloomy. The Eurozone debt crisis is intensifying a global slowdown, with new signs that even powerhouse Germany may be faltering, adding to worries about China and other major pillars of economic growth.

Analysts worry that economies and markets now are so intertwined that the emerging slowdown will further weaken economic confidence in many parts of the world, which is already fragile.

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