Seven of 91 European banks failed stress tests aimed at measuring their strength in case the continent's government debt crisis worsens sharply.
The Committee of European Banking Supervisors said Friday that the seven banks would see their capital positions fall below the levels deemed sufficient in the case of what it called a "sovereign shock" that hits the prices of government bonds they invested in.
The biggest failure was Germany's nationalized lender Hypo Real Estate Holding AG, though that had been widely expected in the markets. Results are still coming in.
The tests are aimed at reassuring markets that Europe's banking system can weather any bumps in the road ahead.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
FRANKFURT, Germany (AP) -- A clear majority of the 91 EU banks have passed stress tests conducted by regulators -- but Germany's nationalized lender Hypo Real Estate Holding AG failed.
It was the only German bank to fail the European stress test.
Officials said Friday that HRE's tier 1 capital ratio would fall under 6 percent under two tested scenarios in which the economy goes back into recession and there is a new sovereign debt shock.
The tests are measuring the ability of 91 European banks to withstand an economic downturn in an attempt to reassure markets.
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