Standard & Poor's lowered the credit ratings and outlooks for 12 major U.S. and European banks Friday, including Goldman Sachs and Bank of America, citing increasing industry risk and a deepening economic slowdown.

"We are raising our overall assessment of bank industry risk and believe there will be more volatility in funding markets," S&P said in a statement.

The major independent investment banks' business model has more risk due to more volatility in the funding markets, their reliance on short-term wholesale funding and confidence sensitivity, the rating agency said in a statement.

"The rating actions on GS also reflect our view that the cyclical downturn in GS's core investment banking, trading, and asset-management businesses could well be far more pronounced and extended than we had previously assumed," Standard & Poor's credit analyst Scott Sprinzen said in a press release.

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