Standard and Poor's on Friday lowered the credit rating of 34 Italian banks in a move that follows the agency's two-notch downgrade of Italy on January 13.

Italy's biggest financial institutions, including UniCredit, Intesa Sanpaolo, Banca Nazionale del Lavoro and Mediobanca, were hit.

In January, Standard and Poor's downgraded Italy's credit rating by two notches to BBB+ from A.

Since coming to power in November, Prime Minister Mario Monti has pushed through a harsh austerity plan and has asked for European assistance in helping to drive down borrowing costs for Italy on the debt markets.

The efforts have helped bring Italy's 10-year borrowing rate closer to 6.0 percent after hovering around 7.0 percent late last year, a level largely understood to be unsustainable.

With sky-high public debt and an economy headed into a recession, Italy faces a daunting challenge this year as it needs to raise around 450 billion euros ($571 billion) on the markets at higher than usual rates.