Several of Spain's 18 savings banks, including some of those which have been involved in recent mergers, have failed to pass tests to see how they would cope with worsened economic conditions, newspaper El Pais reported on Friday citing financial sources.
The tests on 91 European lenders use scenarios Including declines in the value of sovereign debt they hold.
Separately, Manfred Weber, the head of the Association of German Banks, told local radio that he was confident that German banks "all in all" would perform well at the tests.
The Bank of Spain is due to publish the results of so-called stress tests later on Friday, and similar results will be published across Europe.
The euro slipped 0.2 percent against the dollar to around $1.2868 after the Spanish news, just off its levels in late U.S. trade.
The tests had been expected to show that some of the unlisted savings banks would need a capital injection under certain scenarios.
The Spanish newspaper said a small group of savings banks would need more capital if economic conditions were to worsen sharply and there were sovereign debt crises in several countries.
Amongst these, some have already received funds from the Spanish State's Fund for Orderly Bank Restructuring (FROB), it said, without providing further details. It did not name the banks.
European bank regulators toughened the criteria for stress tests on Greek banks on Thursday, just 24 hours before a deadline to release their results, Greek banking sources said.
It was not immediately clear how the stricter criteria would affect the six Greek banks being tested as part of a wider European exercise aiming at assessing how 91 European lenders would cope with another economic downturn. (Reuters)