Standard & Poor's tonight downgraded seven Italian banks after dropping Italy's sovereign rating to A/A-1 two days previously.

The long-term ratings of Mediobanca, Findomestic, Intesa Sanpaolo and their units Banca Imi, Cassa Risparmio Bologna and Biis were downgraded to A from A+. Their short-term ratings remain unchanged at A-1.The rating of BNL was reduced to A+/A-1-.

Unicredit, Italy's biggest bank, escaped a ratings downgrade for the moment but was put on negative outlook.

Standard & Poor's on Monday downgraded Italy's sovereign debt rating, citing economic, fiscal and political weaknesses.

The downgrade came less than a week after Italy approved its second austerity programme in two months, envisaging €54.2 billion in savings to bring Italy's budget back into balance in 2013.