European banks stress test 2011 result analysis

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Only 8 banks failed in the European bank stress-test out of the 90 lenders reviewed. Out of the failed banks five were in Spain, two in Greece and one in Austria.

The banking regulators say the eight test flunkers will need to raise a mere 2.5 billion euros ($3.5 billion) in fresh capital by year-end. Almost no one believes that’s all it will take to shore up Europe’s troubled institutions, especially if Greece or another of Europe’s fragile economies defaults on its debt, which looks increasingly likely.  

S&P conducted its own analysis of European banks and concluded in March that they needed as much as 250 billion euros ($350 billion) -- or much, much more than the EU’s figure -- to withstand a sharp increase in yields and a severe economic downturn. The U.S. required nine banks to raise $75 billion in new equity after stress tests were conducted in the spring of 2009.

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