Eight banks have failed Europe's bank stress
test designed to assess whether they could survive another economic
crisis, banking regulators said Friday.
A total of 90 banks -- representing 65 percent of the assets of Europe's banking sector -- have been subject this year to the tests, which leaders hope will help ease the tensions triggered by the eurozone's debt crisis.
The eight banks -- one from Austria, five from Spain and two from Greece -- fell short of having the required 5 percent core tier one capital, the London-based European Banking Authority (EBA) said releasing the report.
National bank supervisory bodies also need to pay close attention to a further 16 banks.
Ahead of the release of the test results, the German public sector bank Helaba said it was pulling out of the process to avoid failure, claiming the methodology was unfair.
Helaba said its move came after the EBA rejected its plans to boost its capital. The bank plans to publish its own results.
The banks were tested to establish how a dramatic 0.5 percent contraction in economic growth, a 15 percent plunge in share markets as well as trading losses from sovereign debt would impact their operations.
Along with the results of the test, the EBA published details of individual bank exposure to sovereign debt.
Last year, only seven banks failed the stress test. But since then, the test has been tightened after Ireland's banking sector was given a clean bill of health in the results published last year.
A few months later, the Irish banking sector imploded, resulting in the country becoming the second member of the 17-nation eurozone to apply for a bailout from the E.U.-led rescue fund.
The latest test results come at the end of another turbulent period for European financial markets amid concerns that the debt crisis gripping parts of the eurozone could spread to Italy and Spain.
The failure of European leaders to hammer out a comprehensive agreement to address the debt problem facing Greece has also contributed to the market turmoil.
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