Standard & Poor's last night cut the long-term credit ratings of Australia's four major banks by one notch to AA- from AA. The downgrading was expected and in line with the review of country ratings released by S&P last month.The ratings of each major bank's subsidiaries in New Zealand (ANZ National, ASB, Bank of New Zealand and Westpac NZ) were also cut to AA- from AA.S&P cut the long-term rating of Macquarie Group by two notches to BBB from A-. The rating of Macquarie Bank, however, remains unchanged at A.The ratings agency is yet to publish updated ratings on other banks in Australia but may do so by the middle of the month.For the major banks, the updated ratings leave them in the 'AA' category on the S&P ratings scale. All four banks maintain equivalent ratings from Moody's Investors Service and Fitch Ratings.Credit ratings continue to matter for banks and many other borrowers in wholesale markets, since they act a reference for pricing among credit investors.The medium-term consequences of a cut in the S&P rating are hard to judge at a time of widely fluctuating credit spreads. But the firm is the most watched publisher of credit opinions, so the lower rating may affect banks' cost of funds.For their part, banks will continue to push a message of distinctive credentials.In a media statement released last night, Peter Marriott, chief financial officer of ANZ, said: "We continue to be regarded as amongst the strongest banks globally and with a return to the rating we held until the beginning of 2007 we are one of the few banks in the world to have come out of the global financial crisis with the same rating as we went into it with."At the same time as lowering credit ratings for banks in Australia, S&P lifted the credit ratings of three major banks in Asia.Overseas Chinese Banking Corp and United Overseas Bank, both of Singapore, joined DBS Bank in an AA- rating, a rise of one notch for OCBC and UOB.Standard Chartered also received an upgrade, to A+ from A.