July 23, 2010
European regulators painted a rosier-than-expected portrait of the continent's beleaguered banking sector on Friday, provoking criticism that the government's "stress tests" weren't tough enough on banks.
The tests found that 91 banks in 20 European countries could face €566 billion ($730 billion) in total potential losses in a deteriorating economic and financial environment. But only seven banks flunked the tests, coming up short a combined €3.5 billion in capital.
Analysts and investors were bracing for the tests to deem up to 20 banks capital-deficient. They expected these banks' total shortfalls to range from €30 billion to €90 billion.
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