The banks affected by the latest downgrade are NLB, NKBM, Abanka Vipa, Gorenjska Banka, Banka Celje and Probanka. Meanwhile, the agency has affirmed Banka Koper's long-term issuer default rating at BBB+.

The long-term issuer default ratings of the country's largest two banks, NLB and NKBM, were cut one notch to BBB- from BBB. The reason cited by Fitch is the weakening of the Slovenian government's credit profile, and hence its ability to provide support to the banks.

The three-notch difference between the sovereign's ratings and the state-owned banks' ratings reflects "the current lack of an articulated and credible plan to strengthen NKBM and NLB's solvency, and previous delays with capital injections into both banks".

Fitch points out the two banks' high systemic importance, assessing that their recapitalisation needs are about EUR 1.5bn under the base scenario. Should the state be unable to help the banks itself, NLB and NKBM could resort to EU support mechanisms, the agency notes.

Meanwhile, Abanka Vipa's long-term issuer default rating was downgraded by three notches to B- from BB-, Probanka's and Banka Celje's by two notches to CCC from B and to B+ from BB, respectively, while Gorenjska banka was downgraded one notch to BB- from BB.

The outlooks on the ratings of all the banks are negative.