Moody's said Tuesday it was still reviewing Spain's finances for a possible credit downgrade, after missing the previous target date at the end of September.

“We will announce the results of our review this month,” the ratings agency said in an emailed statement, noting that it was assessing the capital needs of Spanish banks as well as the nature and size of support mechanisms.

The recently released 2013 budget plan and the consequences for the euro area's crisis management framework of the further advancement of a banking union are also among factors being considered, Moody's said.

At the end of August Moody's said it planned to complete the review in September, weighing a possible downgrade to Madrid's already poor Baa3 debt rating because of the financial burden on the government of propping up the banking system.

Rumours were rife over the past two days that Madrid would soon formally request a bailout from the European Union, a move that could lead to direct aid to Spanish banks from the European Stability Mechanism, alleviating the pressure on the government's finances and avoiding a rating downgrade.

On Monday Moody's said the planned recapitalization of struggling Spanish banks will help shore up confidence, but the amount in rescue funds sought by Madrid is not enough to keep the banks stable in stress situations.

“Recapitalization will materially enhance the solvency of affected institutions and help restore market confidence in Spain's banking system as a whole,” said the ratings agency.

“However, the recapitalization amounts published by Spain are below what we estimate are needed for Spanish banks to maintain stability in our adverse and highly adverse scenarios.”

The agency believes that the banks would require between 70 and 105 billion euros ($90-$135 billion).

However, an audit carried out by US financial consultancy Oliver Wyman said Friday that Spanish banks need 59.3 billion euros to fix their balance sheets, which have been severely weakened by a property market crash in 2008. - Sapa-AFP