Spain debt woes take their toll on Santander, BBVA

MADRID - Banco Santander SA and Banco Bilbao Vizcaya Argentaria SA sustained profits through the credit crisis and earned a combined 3.5 billion euros ($4.5 billion) in the first quarter. That hasn't stopped investors from punishing their shares as Greece's debt crisis threatens Spain.

Investing in Spanish banks "seems a bit like standing in front of a train", said Andrea Williams, who helps manage about 1.1 billion pounds ($1.7 billion), including Santander and BBVA shares, at Royal London Asset Management in London. "People are concerned that Spain is the next country at risk."

Santander and BBVA, Spain's largest banks, reported earnings that beat analysts' estimates last week and said Spanish bad loans were stabilizing. Investors turned a deaf ear, as speculation that the Greek woes may infect debt-ridden Portugal and Spain outweighed the results, said Sadri Tamarat, a fund manager at Paris-based Shanti Asset Management, which oversees about 350 million euros.