Seven European Union banks have failed the stress tests run by regulators on 91 lenders, the Committee of European Banking Supervisors (CEBS) said Friday, dpa reported.
The stress tests have analysed whether banks could survive a further economic or sovereign-debt crisis. EU leaders insisted the results be made public in a bid to dispel market fears that the European banking system as a whole would need government rescues.
"As a result of the adverse scenario after a sovereign shock, seven banks would see their Tier 1 capital ratios fall below 6 per cent," CEBS said in a press release as it announced the results.
The report said that of the seven banks failing the stress test, five were from Spain, one from Germany, and one from Greece.
Tier 1 capital is seen as the highest-grade capital a bank can hold. Supervisors had said that any bank whose ratio of Tier 1 capital to liabilities fell below 6 per cent would be counted as failing the tests.
Banks which failed will have to propose a "plan to address the weaknesses" revealed in the tests, CEBS said.
CEBS did not immediately publish the names of the banks which failed the tests. Their names were expected to be released within an hour.
However, Germany's national bank, the Bundesbank, confirmed in a separate statement that troubled lender Hypo Real Estate (HRE), which was bailed out by the state in 2008 and was nationalized a year later, was the only one of 14 German banks to fail the test.
Statements released in Belgium, Ireland and Italy said that the banks tested in those countries - a total of nine lenders - had all passed the 6-per-cent threshold.
In each case, regulators assessed the banks' balance sheets to see whether they would be able to stay in business if the European economy returned to recession, and then calculated what would happen if, at the same time, the value of government bonds fell sharply.
Ahead of the publication, some analysts criticized the tests, saying that they did not examine adequately what would happen if one or several eurozone states defaulted completely.