Regulators at the European Banking Authority (EBA) are collecting new information from lenders to help them revise their assessments of the bloc's financial institutions and their exposures to the eurozone debt crisis.

"The EBA, together with the national supervisors, is gathering updated data on banks' capital positions and on their sovereign exposures," a spokesman for the London-based regulator told AFP on Tuesday.

"This is in line with the recommendation issued by the EBA following the outcome of the 2011 EU-wide stress tests, which called on supervisory authorities to request those banks with sizeable exposures to sovereign risk to take actions to strengthen their capital positions."

"The EBA will be assessing the actions taken and report on their actual implementation by mid next year," he added.

The move follows intense media speculation over a fresh round of EU bank stress tests after troubled Franco-Belgian lender Dexia received a state bailout on Monday, just three months after the EBA gave it a clean bill of health.

Dexia had to be rescued and dismantled by France, Belgium and Luxembourg after it ran into liquidity troubles and could not raise cash amid heightened concerns over its exposure to Greece.

Raising the bar

In an address to the European Parliament on Tuesday, EBA head Andrea Enria said banks would be required to hold more capital in the future to increase their resistance to sovereign debt problems and external shocks.

"The first important objective, maybe the most important, is strengthening the quality of capital," Enria said. "A higher level of capital will reduce the probability of default of the banks and their funding costs."

Enria did not provide details of the EBA review, but banking sources told Reuters news agency that the regulators are seeking to raise the minimum ratio of core "Tier One" capital that banks have to hold in their coffers to cover against losses to somewhere between 7 and 10 percent.

Such a move would likely cost hundreds of billions of euros - raising the question of whether banks would be able to raise the money on the markets alone or would need help from national governments or even the eurozone's bailout fund.

The last round of assessments in July passed banks that maintained a core capital ratio of just 5 percent. Only eight of the 90 lenders tested failed.

Those stress tests were widely criticized for not being tough enough. Reuters Breakingviews data indictaes as many as 48 banks would fail a test based on a 7 percent threshold.

Author: Tamsin Walker (Reuters, AFP)
Editor: Sam Edmonds