MADRID (AFP) -- Standard & Poor’s on Monday downgraded the ratings of the top Spanish banks, including Santander and BBVA, after slashing the country’s credit standing because of worsening deficit and growth problems.

The banks affected include Santander and its subsidiary Banesto, BBVA, Banco Sabadell, Ibercaja, Kutxabank, Banca Civica, Bankinter and the local unit of Barclays.

S&P on Friday cut Spain’s sovereign debt rating by two notches to "BBB+" and said Monday that the bank downgrades followed this action as the same considerations “could have potentially negative implications for our view of the economic risk and industry risk affecting the Spanish banking industry.”

Just as S&P made the announcement, official figures showed the Spanish economy slumped into recession in the first quarter, shrinking 0.3 percent after a similar contraction in the last three months of 2011.

The economy, saddled with the highest unemployment rate in the industrialized world at some 24.4 percent, has struggled since a property bubble imploded in 2008, compounding the downturn caused by the global financial crisis.

Faced with mounting debt and falling revenues, the government is trying to stabilize the public finances and cut the annual public deficit.

Last year Spain missed its deficit target by a long way, driving speculation it might ultimately need a debt bailout like fellow eurozone strugglers Greece, Ireland and Portugal.

S&P said it expected to “conclude our review on the wider implications of the sovereign downgrade on the economic and industry risks for the Spanish banking sector and the Spanish banks we rate by end May.”