Poll suggest nine European banks will fail next stress tests

Nine European banks are likely to fail this summer's industry health check and will need to raise a combined €29 billion, according to a poll of investors by Goldman Sachs.

Banks in Spain, Germany and Greece will need to raise the most fresh capital, the US bank said in a research note.

Some 32% of respondents expected €10 to €25 billion to be raised as a result of the stress tests, Goldman said.

A quarter expected €25 to €50 billion to be raised, 27% expected less than €10 billion would be needed and 14% expected €50 to €100 billion to be raised. The responses implied a mean of €29 billion would be needed.

Goldman said 113 participants completed the survey, with 67% in Europe and 27 in the United States. Almost half were long only investors and 30% were hedge funds.

European regulators are demanding 90 top banks hold more, better quality capital in a test aimed at reassuring taxpayers the sector can withstand a two year recession, a collapse of property prices and rising unemployment.

Banks need to hold more than 5% of core Tier 1 capital under the stress test scenario. Results are due out in early July.

The report said 65% believed the amount of capital raised would leave banks adequately or over capitalized and 35% said there would be a capital deficit after the tests.