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Almost one in five of the eurozone’s biggest banks have failed the European Central Bank (ECB)’s comprehensive test of their financial safety.  Twenty-five of the 130 lenders being assessed by the ECB have failed the stress tests - the biggest-ever single review of the single currency’s major banks - including nine Italian institutions.  13 of the 25 need to raise €25bn (£20bn) of fresh capital. The remaining 12 have already covered their shortfalls, the ECB said of the tests, which covered the banks' positions at the end of last year.  Both the ECB and European Banking Authority (EBA) released the results of its stress tests at 11am on Sunday.  The two bodies’ assessments, which model scenarios such as downturns in the housing market, a new recession and a spike in borrowing costs, cover similar ground but have important differences.  The ECB conducted an additional review of eurozone banks’ assets ahead of it taking over as the primary regulator of banks that use the single currency; the EBA’s tests also cover European banks that are not part of the euro, including British ones.  Rather than acting as a black mark against failing lenders, the tests are designed to restore confidence in the sector by giving banks that pass a seal of approval.  The EBA has previously held two rounds of stress tests, the last one in 2011, but they were seen as too soft. I expect to see some renumbering of the whole exercise with about a 10% change on both sides. I also expect to see some form of assurance that this is a one-off 'change of statistical base' event.

I expect UK and perhaps all the others - Holland, Cyprus, Greece, Malta to get some form of instalment deal on the thing.

I also expect some political reciprocity. I know UK and Germany are irked with France's deferral of CAP reform talks that should be happening right now and I know Malta is enraged about response delays on ex-EU immigration issues. A whole interactive political bag has been opened by this 'announcement'.