International rating agency Moody's Investor Service downgraded the ratings of two Cyprus banks on Tuesday, citing the increased risk of Greece's exit from the euro area.

Moody's said in a statement that it had downgraded the deposit and senior unsecured debt rating of the Bank of Cyprus, the island's biggest lender, by one notch to B2 from B1, and lowered its standalone credit assessment to b3 from b2.

Moody's also downgraded the ratings of Hellenic Bank, Cyprus's third largest bank, by one notch to B1 from Ba3 and lowered its standalone credit assessment to b2 from b1.

The two banks ratings were also placed on review for further downgrade.

The second largest Cyprus Popular Bank's senior unsecured debt and deposit ratings now standing at B3, was placed on review for further downgrade. Moody's said the bank's standalone credit assessment of caa1 was also placed for re-assessment.

Cyprus may have to apply for European Union bailout support to raise 1.8 billion euros by the end of June to recapitalize Popular Bank.

Moody's said its actions on the Cypriot banks primarily reflect its view of the increased risk of Greece exiting the eurozone.

Although a Greek exit is not Moody's central scenario, the rating agency said that it considers the risk of a euro exit by Greece as substantial and recognizes that the probability of such an outcome may increase further following the Greek parliamentary elections on June 17.