The readiness in the wake of a crisis of banks was measured by checking whether they were able to complete the adverse or toughest scenarios without preserving a capital ratio of well above 5.5 percent.
Those falling below it risked having to raise more capital or sell risky assets, deemed a negative behaviour by EBA.
None of the 48 banks tested dropped below the 5.5 percent mark.
However, the test surprised because the worse-performing Italian bank, Banco BPM, whose result was 6.67 percent, performed better than UK’s Barclays, which had a 6.37 percent, and similar to Lloyds, at 6.8 percent.
EBA marked them down because of their exposure to credit other than secured loans like mortgages.
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Barclays said in response to the results that it remained comfortable with a target core capital ratio of around 13 percent.
Lloyds said its capital levels remained strong and it continued to expect to generate 2 percentage points of additional capital for the full year.
British banks will be able to compare this results with the one produced by the stress test made by the Bank of England (BoE).
However, the BoE already took a stance with Lloyds and Barclays, saying the tough test showed they were able to absorb the effect of the EBA’s worst scenario.
Italy’s Banco BPM, the result of a merging between the Banco Popolare and the Banca Popolare di Milano, defended its performance saying costs linked to the merger were treated by the test as recurring beside being a one-off, which resulted in a performance much worse than it should have been,
The cumulative costs totalled more than €500 million, and the bank said this meant the results could be misleading.
Upon unveiling the results, Mario Quagliariello, director of economic analysis at the EBA, said: “The outcome shows that banks’ efforts to build up their capital base in recent years have contributed to strengthening their resilience and capacity to withstand the severe shocks and material capital impacts of the 2018 exercise.”
EBA first test took place after the 2008 financial crisis, aiming at identifying capital holes and avoid any repeat of the government bailouts issued in the years that followed the meltdown.
Italy is currently one of the European countries worrying Brussels the most after its populist government issued a draft budget which broke EU fiscal rules.