Ten out of the 91 banks subjected to Europe's stress tests are expected to fail, according to a survey of investors conducted by Goldman Sachs.
In an effort to calm investors' jitters over the potential impact of the euro zone debt crisis on Europe's banking system, banking regulators are assessing how 91 banks across Europe would cope with another economic downturn, and the results are set to be published at 1600 GMT (12 noon EDT) 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, Goldman said in a note dated July 22.
Goldman said 9 percent of respondents expected a capital hike of less than 10 billion euros, 33 percent expect a hike of 10 to 25 billion euros, 35 percent expect a hike of 25 to 50 billion euros, 18 percent expect a capital increase of 50 to 100 billion euros and 5 percent expect a hike of more than 100 billion euros.
Banks domiciled in Spain, Germany and Greece were expected to raise the most fresh capital, and the source of capital was expected to be split between the public and private sector, Goldman said.
More than 60 percent 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 percent expecting outperformance, 26 percent underperformance and 36 percent in-line performance, it said.
The Stoxx Europe 600 banking sector index was down 0.4 percent by 0724 GMT (3:24 a.m. EDT), when the pan-European FTSEurofirst 300 index was down 0.1 percent.
(Reporting by Dominic Lau; Editing by Greg Mahlich)