That the European banks’ stress tests conducted last week were apparently ‘not stressful enough’ was evident from the fact that most of the eurocrats predicted beforehand that a majority of the banks will clear these tests.

With only 7 out of the 91 banks sample banks in 27 countries having failed the stress tests, Citigroup Inc. has revealed that equity and debt markets intend rating European banks using much more stringent parameters than those used by the Committee of European Banking Supervisors (CEBS).

The European Union stress tests had found that the seven banks failing the tests – five small banks in Spain; and one each in Greece and Germany – altogether needed to raise 3.5 billion euros ($4.5 billion) of capital.

Meanwhile, Citigroup analysts, led by Stefan Nedialkov, disclosed in a July 23-dated report that “funding, equity and debt markets will tier banks based on banks’ perceived solvency position under a market-realistic stress scenario.” The report said that the test could be “harsher than the CEBS test and include stressing the banking book.”

Further noting that the markets “don't think the (CEBS) scenarios were stressful enough,” Brian Dolan, chief strategist at Forex. com told Bloomberg News that the reaction in the long run will depend on two main factors – firstly, Europe's ability to sustain the recent uptick in its economic growth; and secondly, Germany's unrelenting readiness to be paymaster of last resort.