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24 European Banks fail financial health test


A total of 24 European Banks have failed a financial health check, which was carried out by the European Banking Authority (EBA).

The test measured the financial strength of 123 European Banks, as of December 2013. However, some of the banks have taken action to raise extra capital since then.

Nine of the 24 banks that failed the test were Italian, with Monte dei Paschi being the worst performer.

As a result of the poor performance of the Italian banking group, their share prices fell by 17% and trading had to be suspended twice.
All of the UK banks passed the financial health check, although Lloyds Bank only just passed.

However, despite the perceived strength of the UK banking sector, Barclays, RBS, HSBC, Standard Charter and TSB all opened trading with reduced share prices.

The reduced share prices were a reflection of a knock in investor confidence in the European financial sector, as only a few of the best performers throughout the EU opened trading with increased share prices.


Whilst 24 banks failed the EBA’s financial health check, 10 of these have already taken action to raise the capital needed to pass the test.

However, 14 banks have not yet taken the necessary action, with four of those being Italian.

It was also revealed that all of the UK banks have taken action to raise capital, despite passing the test.

For example, Barclays has sold its Spanish banking business, whilst HSBC has stopped operating in the Swiss private banking sector.

The other banks which have been told they need to take action include financial institutions from Greece, Belgium and Slovenia.

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