NEW YORK  - Italian Prime Minister Mario Monti dismissed news that Standard & Poor's had downgraded the credit ratings of 34 Italian banks on Friday as "mechanical."

"These decisions by the rating agencies are largely the mechanical effects of previous decisions," Monti told CNBC hours after the announcement was made. Standard & Poor's earlier said that Italy's biggest financial institutions, including UniCredit, Intesa Sanpaolo, Banca Nazionale del Lavoro and Mediobanca, were being downgraded, because of Italy's wider financial woes. Monti said that the banks were in reasonable health.

"By and large, Italian banks have been less hit by the financial crisis than the banks in many other European countries. And have also recently, many of them, recapitalized themselves."

Standard & Poor's in January issued a two-notch downgrade of Italy's sovereign debt.

Since coming to power in November, 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.