Eight out of 90 banks across Europe have failed stress tests, the European Banking Authority said today, a slight increase on seven last year.
The tests act as a financial healthcheck to ensure banks have sufficient capital to deal with difficult economic developments.
All five UK banks covered by the tests passed, the EBA said, with five Spanish, two Greek and one Austrian failing.
The stress tests are designed to publicly identify weak banks so national regulators can push them to strengthen their finances.
Regulators also hope the tests will persuade investors that the EU is coming clean about the extent of its banks' problems.
The EBA analysed some 3,000 pieces of information - as opposed to 149 in 2010 - including how many bonds each bank holds from the financially troubled governments of Greece, Portugal and Ireland.
The eight banks which failed held a level of core tier one capital - a measure of a bank's financial strength - below the 5% required to pass the test. The combined shortfall was 2.5 billion euros (£2.2 billion).
The EBA has also issued its first formal recommendation that individual authorities should require banks whose tier one capital fell below the 5% threshold to promptly fix this shortfall.
Barclays held 7.3% tier one capital, HSBC held 8.5%, Lloyds Banking Group held 7.7% and Royal Bank of Scotland held 6.3%. A figure for Standard Chartered was not available.
A spokesman for the British Bankers' Association said: "The UK's banks took early action to rebuild their capital base following the global financial crisis, and are recognised by international authorities for their work to strengthen their capital positions.
"Today's report from the European Banking Authority provides further information on strengths and weaknesses in the European banking system. This is a significant piece of work, which should now be subjected to careful and considered analysis."
The tests conducted last year by the EBA's predecessor, the Committee of European Banking Supervisers, were criticised for not being strict enough.
Both Irish banks tested in 2010, Bank of Ireland and Allied Irish Bank (AIB), passed but just months later, AIB needed a government bail-out.
Oesterreichische Volksbanken, in Austria, failed, while EFG Eurobank and ATE bank in Greece did not pass.
In Spain, Catalunya Caixa, Pastor, Unnim, Caja3 and CAM all failed.
The EBA added that another 16 banks only just passed the tests.
Jason Karaian, economist with The Economist Intelligence Unit, said: "The stress tests' headline result was underwhelming, but the pressure brought to bear by the markets next week should sharpen the minds of policymakers. Harsh medicine is needed.
"The sooner that officials swallow hard and take decisive, painful measures to draw a line under the crisis, the quicker that Europe's sickly financial system can begin to nurse itself back to health."
A spokeswoman for Lloyds said the announcement reaffirmed the "robust capital position" of the taxpayer-backed lender.
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