Standard & Poor's has downgraded seven Italian banks due to sovereign debt risk. Just days ago, the agency downgraded Italy's credit rating, citing political weakness. In a statement released Wednesday, Standard & Poor's said it was acting "in accordance with our criteria applicable to the relationship between the ratings on financial institutions and their related sovereign in the European Economic & Monetary Union."
It said it was "lowering our long-term ratings on seven Italian banks and assigning negative outlooks to the long-term ratings on these banks."
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
MILAN (AP) — The editor of Italy's main business daily called on Premier Silvio Berlusconi to step down in a page-one editorial that indicates a clear erosion of support among business leaders for the Italian leader.
Roberto Napoletano wrote that the "fragility" of Berlusconi's government had put Italy at risk.
"The country most at risk now, after Greece, is Italy, and this is due to the fragility of your governing coalition, the chain of embarrassing scandals that directly touched you, your ministers and their direct collaborators, and the constant incapacity to make painful if necessary decisions," Napoletano wrote in il Sole-24 Ore.
"Mr. Premier, you should demonstrate that you truly love Italy and should have, as a result, the strength and the willingness to step aside if you ... realize, as is evident to everyone, that you cannot do what is necessary.
The page-one editorial in the newspaper of Italy's top business lobby comes one day after Standard & Poor's downgraded Italy's credit rating, citing political weakness.
The downgrade reinforced fears that Italy, with the second highest debt burden in the eurozone after Greece, is getting sucked into Europe's debt crisis.
Italy has carried heavy debts successfully for years because bond investors have always been willing to loan more money as bonds came due.
But S&P cited weaker growth prospects and a fragile governing coalition as key reasons for its surprisingly swift downgrade of Italian sovereign bonds to A from A+, just four months after issuing a warning.
