Goldman Sachs moves in to advise Spain on its banks, as the EU contemplates a Greek exit

News out of Europe continues to paint a bleak picture of the Spanish economy, suggesting the country may be the next in line for a bailout.

On Thursday, credit rating agency Moody’s downgraded the rating of 16 Spanish banks, including Banco Santander, the largest lender in the eurozone, Reuters reports. The agency cited the weak economy and the government’s reduced ability to support troubled banks in the country as reasons for the downgrade.

There has also been widespread speculation that Bankia, the savings bank partially nationalized by the Spanish government last week, has seen a run of withdrawals. On Friday, Madrid enlisted American investment bank Goldman Sachs to advise it on the recapitalization of Bankia, the Financial Times is reporting. Analysts are predicting Bankia will need around $20 billion in new equity.

Meanwhile, the European Commission and European Central Bank are drafting contingency plans to be used in the event that Greece leaves the eurozone, Reuters reports, quoting EU trade commissioner Karel De Gucht. The news agency says it is the first time an EU official has openly acknowledged plans for a potential Greek exit, an event that some predict could spell the end of the eurozone altogether.