One hundred and thirty of the bloc's biggest lenders, accounting for 82 percent of the EU's total banking assets, were assessed by the ECB over the course of 2014, together with the European Banking Authority, the EU's bank watchdog,

There are no sanctions for the 25 lenders, who now have two weeks to present a plan to regulators to improve their balance sheets.

None of the EU's banking giants in the UK, France, or Germany failed the tests.

Ten banks have already taken steps to bolster their balance sheets, with the remaining 14 including four Italian banks, three Greek banks, three Belgian banks, and two Slovenian banks.

The worst affected was Italian bank Monte dei Paschi, the world's oldest bank, which has a capital shortfall of €2.1 billion according to the ECB.

ECB vice-president Vitor Constancio said that the tests would "boost public confidence in the banking sector" and were a "major milestone" in the preparation for the Frankfurt-based bank becoming the EU's chief bank supervisor.

The tests are the result of "a constant dialogue with banks" an ECB official told this website. "We know that banks have taken in a significant amount of new capital this year," he added.

The ECB says the largest 30 participating banks have strengthened their balance sheets by more than €200 billion since summer 2013.

However, it also found that a "severe stress scenario" involving a recession wiping off 5 percent of the EU's output, would still reduce bank capital by €263 billion.

The ECB and the EBA disagreed on one bank, Spain's Liberbank, which narrowly passed the EBA stress test, but was found to have a capital shortfall of €32 million by the ECB.

Lawmakers have adopted rules to force banks to increase the amount of high-quality capital on their balance sheets to make them more robust against future crashes, and to reduce the chances of future bank bailouts of the scale witnessed after the 2008-2009 financial crisis.

EU banks currently hold capital worth over 12 percent of their total liabilities.

The exercise has involved more than 2,600 banking experts in national and EU regulators.