The Moody's rating agency lowered the outlook for banks in Germany, Italy, and four other countries from stable to negative amid weakening economies due to the energy crisis and high inflation. The downgrade will also affect the banking sector in the Czech Republic, Hungary, Poland, and Slovakia, Reuters reported.

European bank stocks are down nearly 25 percent from their highs before the war in Ukraine earlier this year.

Moody's said it expects bank credit quality, profitability and access to financing to decline.

Moody's outlook for British and Austrian banks remains stable.