Standard & Poor’s has downgraded its ratings of 24 Italian banks, including major lenders BMPS and UBI Banca, citing the deteriorating economic condition in the country.

“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,” said the ratings agency in a statement.

It said funding costs for Italian banks will increase noticeably because of higher yields on Italian sovereign debt, with that to result in tighter credit conditions and weaker economic activity in the short-to-medium term.

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

Last month it cut the credit ratings of seven of Italy’s large banks, but it left the rating of Unicredit, Italy’s biggest bank, unchanged but put it on watch for a possible downgrade.

Italy has been stuck with slow growth for years and following credit rating downgrades it is now under heavy pressure on financial markets to tame its debt amid fears of contagion from the eurozone debt crisis.

The government has adopted two austerity packages in recent months, but has made little progress on promises to come up with a plan to boost growth.

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