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October 18, 2011 10:47 AM PDT

U.S.-based credit agency Standard & Poor’s downgraded the credit ratings of 24 Italian banks and financial companies, citing lower economic growth outlooks and new “market tensions.”

S&P said the ratings cuts were taken after it reviewed the dimmer climate for Italian banks, including such prominent lenders Banco Popolare and UBI Banca.

"In our opinion, renewed market tensions in the Eurozone's periphery, particularly in Italy, and dimming growth prospects have led to further deterioration in the operating environment for Italian banks," the agency said in a statement.

S&P indicated that due to the higher yields on Italian sovereign government debt, the financial costs for Italian banks will rise appreciably, leading to a tighter credit environment.

"We do not believe that this difficult operating climate is transitory or that it will be easily reversed," S&P added.

In September, S&P downgraded seven Italian banks; although it did not cut the country’s largest bank Unicredit, rather opting to put in on watch for a possible downgrade.

The Italian government, mired by high debt and tepid economic growth, has been compelled to impose unpopular austerity measures in order to prevent the contagion of the debt crisis currently wracking Greece.

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