S&P Lowers Rating on Monte Paschi, 23 Other Italian Lenders

Standard and Poor’s lowered its rating on Italy’s banking industry and downgraded 24 lenders including Banca Monte dei Paschi di Siena SpA, saying fallout from the sovereign debt crisis would boost their borrowing costs.

“We think funding costs for the banks will increase noticeably because of higher yields on Italian sovereign debt,” S&P said in e-mailed press release. “Furthermore, higher funding costs for both the banking and corporate sectors are likely to result in tighter credit conditions and weaker economic activity in the short-to-medium term.”