Things aren’t looking up in Europe’s economic crisis: Eight banks have failed a stress test that revealed they had a combined capital shortfall of €2.5 billion, or $3.5 billion. The test was introduced by the European Banking Authority this year, and any banks that fail must present a plan to raise more capital within three months. Steve Pearson, a partner at PricewaterhouseCoopers, reminded his clients that failing the test could result in the “potential loss of stakeholder confidence and the risk of a credit-rating downgrade.” While banks tested in Italy, Germany, France, the U.K., and Ireland all passed assessment, several banks in Spain, Greece, and one in Austria came up short.
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