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) -- Financial stocks were lower on Friday, with heavy selling in large European banks following news that creditors will take a hit under Ireland's new austerity plan.

Swiss investment banking giant


(UBS) - Get UBS Group AG Report

was down 3.4% at $15.30, with Germany's

Deutsche Bank

(DB) - Get Deutsche Bank AG Report

and Zurich-based

Credit Suisse

(CS) - Get Credit Suisse Group AG Report

down 3% at $50.60 and $38.33, respectively. Munich-based insurer and money manager

Allianz SE

also saw its U.S.-listed stock down 2.8% at $11.47 by late morning.

Irish Prime Minister Brian Cowen outlined an ambitious four-year austerity plan this week. Ireland will seek international aid in the short term to get its financial house in order as it cuts 10 billion euros in debt through higher taxes and spending cuts. On Friday, S&P slashed ratings of the three main Irish banks, noting that the bailout granted by the E.U. and International Monetary Fund is likely to require more losses for senior bondholders.

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Standard & Poor's cut the ratings of

Anglo Irish Bank

six notches to junk, at a B level. The lender was most severely affected by the Irish downturn and nationalized last year. S&P also cut

Bank of Ireland



Allied Irish Banks


one notch apiece to BBB+ and BBB, respectively. The U.S.-listed shares of Bank of Ireland were down 5.1% at $1.50 while AIB was down 4% at 97 cents.

There are concerns that the pain may spread as other nations much larger than Ireland, like Portugal and Spain, whose balance sheets are similarly taxed, make cuts in the near-term.

U.S. financial stocks were also lower, during a session that was generally bearish on concerns about the cascading effects of Europe's debt problems. The KBW Bank Index of large-caps was down 0.7% as the

Dow Jones Industrial Average

tracked 0.8% lower.

The biggest U.S. banks were lower, with

Bank of America

(BAC) - Get Bank of America Corp Report

losing 1.4% at $11.12;,

JPMorgan Chase

(JPM) - Get JPMorgan Chase & Co. Report

down 1.4% at $37.64;


(C) - Get Citigroup Inc. Report

, 1.5% lower at $4.11; and

Wells Fargo

(WFC) - Get Wells Fargo & Company Report

down 0.8% at $26.89.

-- Written by Lauren Tara LaCapra in New York


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