Ratings agency Moody’s Investor Services said today it had downgraded 26 Italian banks and kept them on a negative outlook to reflect the worsening conditions in Italy and the rest of Europe.
According to Agence France-Presse, Unicredit and Intesa Sanpaolo were among the more than two dozen banks to have their credit ratings slashed by up to four notches.
Other banks included Banca Monte Dei Paschi, Banco Popolare and Unione di Banche Italiane, MarketWatch said.
The move is likely to push up borrowing costs for those banks.
Moody’s said the Italian lenders faced “mounting asset-quality challenges and weakened net profits” as well as rising “problem loans” due to the country’s relapse into recession and government austerity measures.
“The ratings for Italian banks are now amongst the lowest within advanced European countries, reflecting these banks' susceptibility to the adverse operating environments in Italy and Europe,” Moody’s said in a statement.
Bloomberg noted that the move followed Moody’s decision in February to cut the credit rating of Italy to A3, four steps above junk, from A2 with a negative outlook, on doubts about its ability to deal with the worsening debt crisis.
Five other countries, including Spain, also had their credit ratings cut.
More from GlobalPost: Moody's downgrades six European countries
Moody's said in February it would review the impact of the euro zone crisis on 114 European banks. The results on banks in Spain are expected next, according to Bloomberg.