Half of the euro zone's biggest banks wouldn't survive a six-month cash drought, with larger firms and subsidiaries of foreign institutions among the most vulnerable, the European Central Bank said on Monday.
The ECB's test of 103 lenders laid bare some weak spots in the euro zone's banking system at a time of growing fears about an upcoming recession and upheaval in the US money market.
It showed that four banks wouldn't survive six months if they were frozen out of the wholesale funding market and 52 would go under within six months if financial counterparties and some commercial clients took their money out.
"Universal banks and global systemically important banks would generally be affected more severely than others by idiosyncratic liquidity shocks as they typically rely on less stable funding sources," the ECB said in a press release.
Twenty-six banks would survive longer than six months even under an "extreme shock" in which their credit rating is downgraded by three notches and more deposits leave.
It added the results were "broadly positive", noting that current rules only required banks to have enough liquid assets to survive 30 days.
Still, several banks had to re-state their liquidity levels following the ECB's check, which will now be used by supervisors as part of their assessment.
"The results will... inform the assessment of banks' governance and liquidity risk management," the ECB said.
The ECB's Sensitivity Analysis of Liquidity Risk drew on real-life experience from the ECB' work as the euro zone's banking supervisor, which saw it declare Spain's Banco Popular "failing or likely to fail" after it ran out of cash in 2017.