The European Banking Authority has set a core Tier 1 capital ratio of 5% for banks to pass the next round of stress tests, a level the EBA says is comparable to that in the U.S. The EBA has called on European countries to have a back-up plan for providing capital to banks that fail the test, though banks will have until the end of the year to work with regulators in their respective countries to find ways to fix the problem, either by raising cash privately, selling assets or deleveraging.
