Global credit rating agency Standard and Poor's has downgraded the ratings of many of the world’s largest financial institutions.

The firm said Tuesday that it decided to mark down by one notch the ratings of many major investment banks including Goldman Sachs, HSBC, JPMorgan Chase and Citigroup, after revisiting ratings on 37 of the world's largest banks.

The rating agency added the recent downgrade is part of a process of "applying its new ratings criteria for banks."

Market observers say the banks that saw their ratings slashed are expected to see higher funding costs.

Fitch Ratings had warned earlier this month that major investment banks could see their ratings downgraded if the debt crisis in Europe is not resolved in a timely manner.