S&P cuts credit rating of 18 Italian banks

Standard & Poor's has downgraded the long-term credit rating of 18 Italian banks due to deepening recession.

A total of 17 banks including Ubi Banca, Credem and Fga Capital were cut by one notch while another lender, Agos Ducato, was downgraded two notches from BB+ to BB-, reported Xinhua.

Two of the country's largest banks, Intesa Sanpaolo and UniCredit, were not included in the downgrade by the US agency.

Italian banks operate in a "situation with increasing risks to the economy, which leaves them more vulnerable to a longer and deeper recession" than previously expected, Standard & Poor's said in a statement.

The country's economy, which is in its longest recession in more than 20 years, will contract by 1.9 percent in 2013, meaning that gross domestic product (GDP) will have dropped by fully 9 percent in real terms from 2007 levels by the end of this year, the agency said.

Also, Italy does not expect to see "this trend reverse significantly in 2014", according to Standard & Poor's, which earlier this month downgraded the country's sovereign rating to BBB from BBB+ with a negative outlook.