Ratings agency Moody's Investor Service has downgraded the credit ratings of Canada's biggest bank, the Royal Bank of Canada, and 14 other banks with global operations.

Moody's cut RBC's long-term deposit rating by two notches to Aa3.

A downgrade usually means that it becomes more costly for banks to raise money by selling debt. Investors demand higher interest for riskier debt, which is what the downgrades represent.

The Royal Bank said the downgrade will not affect its clients and will have a minimal impact on its business.

"RBC remains one of the strongest and highest rated banks in the world. That category crosses a number of classifications in terms of credit ratings, in terms of capital base and in terms of balance sheet," the bank said in a statement.

"While Moody's has changed their overall view of the capital markets industry, RBC Capital Markets has been consistently profitable, thanks to a strategic and measured approach to growth and prudent risk management," RBC said in a statement.

The announcement came after the close of markets on Thursday.

Citigroup and Morgan Stanley also issued statements saying they disagreed with their assessments.

Moody's cut Swiss banking giant Credit Suisse Group by three levels and Morgan Stanley and UBS by two levels.

Others cut by one level included Bank of America (to Baa2 from Baa1), Citigroup (to Baa2 from A3), and JPMorgan Chase (to A2 from Aa3).

Moody's said it was especially concerned about banks with significant financial markets businesses because those markets have become so volatile.

The latest Moody's report split up the 15 large banks that were downgraded into three main groups:

The top group, which had the highest ratings, included JPMorgan, HSBC and Royal Bank of Canada — firms considered by the credit ratings agency to have stable businesses sufficient to offset losses from volatile financial markets businesses.

Among the banks included in the second group were Goldman Sachs, Deutsche Bank and Credit Suisse. Moody's said some of these firms still managed risk effectively, even though they rely heavily on their markets businesses to satisfy their shareholders.

Group three was for the banks considered to be the weakest, and included Bank of America, Citigroup, Morgan Stanley and Royal Bank of Scotland. Moody's said these banks have either had "problems in risk management or have a history of high volatility," and some of them have implemented business strategy changes.

Moody's had said in February that it was considering downgrading the credit ratings of major banks in the U.S. and in Europe.

On Thursday the Dow Jones industrial average plunged 251 points, its second-worst loss of the year, as new reports indicating slower manufacturing in the U.S. and China made investors fearful that the global economy could be heading for another slump.