The health checks should restore some confidence and stability to the market. REUTERS/Ralph Orlowski
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ECB fails 25 banks in stress testRoughly one in five of the eurozone's top lenders failed landmark health checks at the end of last year but most have since repaired their finances, the European Central Bank said Sunday.The ECB found the most critical problems to be in Italy, Cyprus and Greece but concluded that banks' capital holes had since chiefly been plugged and that only 10 billion euros ($12.6 billion) remained to be raised.Once overvalued loans across the sector were taken into account, the ECB said the overall impact on banks was 62 billion euros.The ECB's passmark was for banks to have high-quality capital of at least 8 percent of their risk-weighted assets, a measure of the riskiness of a banks' loans and other assets, if the economy grows as expected over the next three years, and capital of at least 5.5 percent if it slides into recession.For many banks, the biggest impact of the ECB tests was not in identifying capital holes but in finding that their assets, such as loans, had been overvalued.Among the major listed banks, the biggest hits were to Greece's Piraeus bank, whose core capital fell by 3.7 percentage points after the ECB adjusted the bank's capital to reflect the new asset valuations.
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