Moody's Investors Service downgraded the debt and deposit rating of nine Portuguese banks by one or two notches, citing the deterioration in the bank's domestic asset quality and liquidity difficulties which affected the overall financial strength of these banks.

Moody's noted that the risk stems from the anemic growth prospects for the Portuguese economy, which was downgraded in July to Ba2 with a negative outlook, where Moody's deems that there are heightened risk that recapitalization and deleveraging plans for banks would face a difficulty in implementation.

The nine banks have negative outlook except for Banco Portugues de Negocios, which has a developing outlook on all of its ratings, according to the rating agency.