France's second and third largest banks by assets – credit Agricole and Société Générale – on Wednesday saw their credit ratings downgraded one notch by Moody's Investors Service.

Moody's slashed Credit Agricole to Aa2 from Aa1 while Société Générale was reduced to Aa3 from Aa2 with a negative outlook for long-term debt and deposit ratings.

The downgrade follows months of speculation after Moody's said in June it was reviewing France's top three listed lenders and their Greek debt exposure. BNP Paribas is still being assessed by the ratings agency.

The news triggered stock volatility with SocGen shares falling 1.7 percent, Credit Agricole rising 3.5 percent and BNP Paribas dropping by 3.9 percent.