Standard & Poor's downgraded on Thursday the credit rating of five large Australian banks. However, rival Moody's Investors Service maintained the stable outlook of the big four banks.

The biggest hit was suffered by investment bank Macquarie Group (ASX: MQG) which S&P downgraded by two notches to BBB from A-. However, the rating agency maintained a stable A- rating for Macquarie Bank.

The rating agency also cut the rating of the four large Australian banks - Commonwealth Bank of Australia (ASX: CBA), National Australia Bank (ASX: NAB), Westpac Banking Corporation (ASX: WBC) and Australia and New Zealand Banking Group (ASSX: ANZ) - by one notch to AA- from AA.

"At this point we do not expect this to have any material impact on our funding plans or expected pricing of our new issuance," CBA Treasurer Lyn Cobley said in a statement.

She added that the four banks have actually been increasing deposits and replacing short-term wholesale funding with more long-term ones. Ms Cobley stressed that the four banks are among the few banks in the world that still belong to S&P's AA categories.

Lower ratings increase the funding costs of banks, although the credibility of ratings agencies are also under question mark because of their failure to properly assess the credit risks of banks and other financial institutions during the 2008 global financial crisis.

However, the downgrade is expected to have minor impact on the big four's funding cost since funding costs have been rising sharply as credit markets tighten over the worsening European sovereign debt crisis.

On the same day that S&P downgraded the five Australian banks, Moody's kept the four on a stable outlook as well as their AA ratings.

S&P said that Macquarie's position was adequate and its operations are diversified relative to its size, but the agency pointed out that the markets on which Macquarie operates are "inherently complex and volatile" which has a constraining effect on its view of Macquarie's business stability and overall view of its business position.

The third major ratings agency, Fitch, said that Australian banks are generally positioned well to meet the new regulatory requirements under the Basel III rules.

"Australian banks are already largely complaint with the new capital rules, although importantly, regulatory capital ratios will continue to be lower than under a full harmonised Basel III framework due to APRA's conservative interpretation of the rules," said Fitch Director of Financial Institution group Tim Roche.

Mr Roche added the liquidity rules are a greater challenge for banks, but it could ultimately be surmounted.