The financial resilience of banks here has improved more than that of lenders anywhere else in the euro zone since 2010, according to researh from law firm Linklaters.

Euro zone banks have raised 35pc more capital ahead of the European Central Bank’s (ECB) latest stress test than they had set aside before a 2011 review, according to a report published by the law firm.

The euro zone’s 130 most strategically important banks will be told on October 26 how they have fared in the ECB’s landmark review.

Banks that fail the tests will be forced to raise fresh capital, from private investors or Governments.

In Ireland, the standard core equity tier 1 (CET1) measure used by regulators to judge banks’ ability to cope with shocks improved by 8pc between 2010 and 2013.

That compares to 5pc in the next most improved countries including Germany, according to the research.

AIB, Bank of Ireland, Permanent TSB and Ulster Bank, as well as an Irish unit of Morgan Stanley, are among the banks waiting for results this month.

Linklaters said banks in the euro zone have raised €35bn ahead of the review, a figure that could rise to nearly €50bn by the end of the year.

In Ireland, with the exception of the 2011 deal that saw Wilbur Ross, Prem Watsa and other American funds take a 35pc stake in Bank of Ireland, much of the improvement reflects cash pumped into the banks as a result of State bailouts.

According to a new report from rating agency Fitch the capital raising that has characterised the bank sector in recent years will continue past the current round of stress tests.

Fitch expects most banks to pass the stress tests but highlighted concerns about so-called unreserved impaired loans, problem debts that have not been fully accounted for.

Banks here, along with those in Greece, Italy and Spain, hold a combined two-thirds of the entire euro area total for such unreserved impaired loans, according to Fitch.

Meanwhile a top Bundesbank official claimed the stress tests can already be considered a success.

“It’s already clear now that the exercise is a success because European banks have strengthened their balance sheets by around €200bn,” said Andreas Dombret, who is in charge of banking supervision on the board of the German central bank, the Bundesbank.

Mr Dombret was speaking in an interview with German financial newspaper Handelsblatt. (Additional reporting Reuters)

Irish Independent