11 Feb 2012

Italian banks downgraded

5:52 pm on 11 February 2012

International agency Standard and Poor's has lowered its credit rating for 34 Italian banks.

The downgrade affects nearly all of the country's banks that the agency rates, including Italy's biggest financial institutions.

Standard and Poor's has lowered its general view of the soundness of the Italian banking system and now puts it in the same category as Brazil and Mexico, the BBC reports.

Thirty-four out of 37 individual financial firms have had their credit rating downgraded as a result.

This partly reflects the high level of Italian government debt and possible spillovers to the banks.

Standard and Poor's says that banks' profits and the country's economic growth are likely to be weak and banks may find it harder to borrow the money they need.

Italy has been a focus of much of the worry about the European debt crisis, given its high debt levels and intense borrowing needs.

Under new Prime Minister Mario Monti, a former European Commissioner, the government has passed austerity measures and is embarking on reform of its financial system.