The European Central Bank adopted a more pessimistic assessment of the risk of failure of two or more major eurozone banks. In its regular Financial Stability Review the ECB said the risk was around one in four.
The conclusion is a mechanical reading of the implied risk of default in pricing on credit default swaps rather than an independent assessment of the risks based on fundamental analysis.
Reviewing developments over the last six months the ECB said that "risks to euro area financial stability increased considerably" as "contagion effects in larger euro area sovereigns gathered strength."
On bank funding pressures, the ECB said that "while contained by timely central bank action, [these] increased markedly in specific market segments, particularly for unsecured term funding and US dollar funding."
The ECB also highlighted "credit risks for banks and second-round effects through a reduced credit availability in the economy.