Moody's Investor Service changed the outlook to negative on no less than 82 long-term European bank ratings in an exhaustive report on the sector published on Friday.

In summary, the credit rating agency affirmed the long-term ratings of 105 banks in the European Union (EU), Norway and Liechtenstein. Of these banks, Moody's changed the outlook to negative on 82 long-term ratings, upgraded the outlook to stable from positive on two long-term ratings, kept the outlook at stable on 18 long-term ratings and maintained the outlook at positive on four long-term ratings.

Of all the actions taken, the only change affecting a UK company was the downgrade in the outlook on National Building Society to negative from stable.

Moody's explained in the report that it had taken these actions due to recent EU regulation that included the adoption of the Bank Recovery and Resolution Directive and the Single Resolution Mechanism.

"The negative outlooks reflect Moody's view that, with the legislation underlying the new resolution framework now in place and the explicit inclusion of burden-sharing with unsecured creditors as a means of reducing the public cost of bank resolutions, the balance of risk for banks' senior unsecured creditors has shifted to the downside," the agency wrote in the report.

"While Moody's support assessments are unchanged for now, the probability has risen that they will be revised downwards to reflect the new framework," these analysts added.

In a breakdown of how country's were affected, Moody's noted that 12 banks were included in Germany, 10 in France, eight in Austria, five in Sweden, four in Italy, three in the Netherlands, two in Spain and one in the UK. Another 24 financial institutions were included in EU member companies.

Actions taken on 12 banks in Norway and one from Liechtenstein because, although not affected by the new EU regulations, Moody's noted that they tend to follow the same framework.

JM

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