A group of 25 European banks have failed a key healthcheck of the region’s financial system, exposing a 25 billion euro ($31.7 billion) shortfall on their books. The European Central Bank also found that all of the euro zone’s banks have not been strict enough in identifying toxic assets, finding an additional 136 billion euros in non-performing loans.
Of the 25 banks that have failed the ECB’s test, which was a snapshot of their books at the end of last year, 12 of them have already covered their capital shortfall.
Those 13 banks still with gaps will now have two weeks to submit a plan to bolster their capital to the European Central Bank (ECB), which will decide whether or not it gets the green light. They will then have up to nine months to cover the capital gap. Any bank that fails to repair its books will then face the prospect of regulatory intervention.
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