As showed the latest survey from Goldman Sachs 10 out of the 91 banks subjected to Europe's stress tests are anticipated to fail.
In a move to calm down investors' excitements over the potential aftermaths of the euro zone debt crisis for Europe's banking system, banking regulators are assessing how 91 banks across Europe would cope with another economic downturn. The results are due to be published at 16:00 GMT on Friday.
The Goldman Sachs poll of 376 respondents, including hedge funds and long-only investors, showed European banks were on average expected to raise 37.6 billion euros ($48.4 billion) in extra capital following the tests.
According to Goldman Sachs’s poll, 9% of the respondents predict capital hike of less than 10 billion euros, while 33% expect a hike of 10 to 25 billion euros, 35% anticipate a hike of 25 to 50 billion euros, 18% expect a capital increase of 50 to 100 billion euros and 5% forecast a surge of more than 100 billion euros.
Spanish, German and Greece banks were expected to raise the most fresh capital, and the source of capital was expected to be split between the public and private sector
Over 60% of the respondents believed the amount of capital raised would leave banks adequately capitalized, while the rest saw a capital deficit remaining.
However, opinions were split on the performance of the sector in the three months following the test, with 38% expecting outperformance, 26% underperformance and 36% in-line performance.