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Last week I wrote an article describing my admiration for Spanish banking giant Banco Santander (NYSE: STD), but I opted not to purchase shares for my real-money Motley Fool portfolio. Instead, I entered into a $1,000 position in Telefonica; I still think this was a good decision, but by no means am I done looking at Santander.

Negative sentiment continues for Spain
Investors are pretty much scared of all things Eurozone since the Greek bailout earlier this year, and more recently, the debacle that has brought Ireland to its knees. Allied Irish Banks (NYSE: AIB) and Bank of Ireland (NYSE: IRE) have both seen their shares plummet by more than 60% so far this year, and investors in Greece's National Bank of Greece (NYSE: NBG) have seen similar losses.

And today, Moody's Investors Service lifted its estimated loan losses for the Spanish banking system by 63% -- from $143 billion to about $233 billion. According to Moody's, the country's banks have only recognized about half of this figure so far, and it believes that they'll need an additional $22 billion in order to survive such a hit to the books. As stated by Moody's analysts Jose Alberto Postigo and Antonio Garre, "The severe economic contraction that Spain has faced since the second half of 2008 is expected to depress growth into 2011. As a result, banks will face a challenging economic environment for a prolonged period of time, pointing to negative prospects for asset quality and earnings."

Why I like Santander even more
You would think that news like this would send shares of Santander and Banco Bilbao Vizcaya (NYSE: BBVA) into a nosedive; however, that doesn't seem to be the case just yet. The reason is that most of the required capital needs are for the nation's cajas, or savings banks. More than 70% of the $22 billion estimated for Spain to take on the loan losses that Moody's expects belong to the savings banks. Financial behemoths like Santander are well capitalized and have a very strong foothold in the retail sector where margins and profitability are already high. That's a lot better than the situation that Irish banks face, with AIB needing another $10 billion-plus in new equity capital and the Bank of Ireland facing more stake dilution from the Irish government in order to shore up its balance sheet.

What we might find is that some of the large, well-capitalized banks that have seen their shares hit hard are also the same ones that are trading at dirt cheap prices right now and could offer a great entry point for value investors.

For instance, National Bank of Greece's forward price-to-earnings ratio is 6.5, compared with the FTSE Greek Bank index 10-year average of 11.8. Santander's forward price-to-earnings ratio is 7.2 versus the FTSE Spanish Banks index's 10-year average of 11.4. Italy's Intesa Sanpaolo has a forward price-to-earnings ratio of 8.9 versus the FTSE Italian Banks index's 10-year average of 11.9.

In addition, Santander makes about 44% of its revenue from Latin America; Spain actually accounts for much less. But banks that have significantly more exposure to places like Spain or Greece, such as BNP Paribas or Societe Generale, haven't seen their shares sold off nearly as much.

It's for these reasons that I'm going to keep a keen eye on Santander, which I continue to think is one of the best investments around.

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Jordan DiPietro owns shares of National Bank of Greece. The Fool owns shares of Telefonica. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.