Ratings agency Moody's has cut the ratings of 16 Spanish banks by between one and three notches.
The agency cited "renewed recession, the ongoing real-estate crisis and persistent high levels of unemployment".
It also blamed the reduced creditworthiness of the government.
The move came just over a week after the government intervened to prop up the fourth largest bank, Bankia, by taking a 45% stake.
Top bank Santander and number two BBVA were both hit with three-notch downgrades to A3, while two other large banks Banesto and CaixaBank, were also cut to the same level.
Bankia has had to bat away rumours it had been hit with a run on deposits, as nervousness around the eurozone grew over the entire Spanish banking sector.
Earlier, Moody's downgraded the credit of four Spanish regional authorities, warning they would likely miss their deficit-reduction targets.
