By Sarah White and Michael Shields
MADRID/VIENNA (Reuters) - The European Central Bank cautioned on Wednesday against speculation over the outcome of its stress tests after a media report said at least 11 banks had failed the landmark financial health checks, driving some banking shares lower.
Austria's Erste Group (VI:ERST) rejected the report from Spanish newswire Efe, which said that it along with banks from Italy, Belgium, Cyprus, Portugal and Greece, had failed the ECB review based on preliminary data, but it gave no details of the size of the capital holes at the banks.
The ECB, which will publish the test outcomes for 130 banks on Sunday, said final results had not yet been sent to the lenders involved, and it could not comment on individual institutions.
"Any inferences drawn as to the final outcome of the exercise would be highly speculative until the results are final on 26 October," said an ECB spokesman.
The European Banking Authority, the EU watchdog coordinating the Europe-wide stress test, said the results would not be final until they are endorsed on Sunday just prior to publication. It had no comment on individual lenders.
Erste told Reuters it had no reason to believe it would fail the test.
Banks have already had some feedback on the outcome of the tests through 'supervisory dialogues' with the ECB. They get the results on Thursday, three days ahead of the public announcement. The ECB becomes supervisor of the euro zone's banks on Nov. 4.
"Out of the supervisory dialogue we have no indication we won't pass," an Erste spokesman said. The bank's shares were down 1.4 percent at 0937 BST.
There were no immediate comments from the other affected banks on the report, which briefly caused the euro to dip and led to European stocks reversing early gains.
Most shares of the banks mentioned in the report were under pressure, though the banking sector index <.SX7E> recovered from earlier losses to edge up 0.1 percent.
"The bigger, more important question is not which banks have failed but which banks have achieved only a marginal pass," said Jeremy Batstone-Carr, head of private client research at Charles Stanley.
IN THE CROSSHAIRS
Sources told Reuters that German public sector lender HSH Nordbank [HSH.UL] - which was not named in the Efe report - was set to pass the health checks. HSH was seen as the German lender most likely to fall short of requirements.
Other than Erste, the banks listed by Efe were Italy's Banco Popolare (MI:BAPO), Monte dei Paschi (MI:BMPS) and Banca Popolare di Milano (MI:PMII); Greece's Alpha Bank (AT:ACBr), Piraeus Bank (AT:BOPr) and Eurobank (AT:EURBr); Portugal's Millennium BCP (LS:BCP) and Belgium's Dexia (BR:DEXI).
The agency also said a second, unnamed Austrian bank and a Cypriot bank were set to fail.
"They are wrong," a senior Cypriot official told Reuters. He added that one Cypriot bank had already pre-emptively raised capital, and another had the full backing of shareholders to raise money if it needs to. "That's hardly a failure," he said.
One London-based trader from a major U.S. bank questioned the accuracy of the list. "This is taking a 2013 snapshot and most of the banks on that list have already raised money through 2014 and done significant balance sheet actions this year," the trader said.
One Austrian bank that is expected to fail is the country's part-nationalised lender Volksbanken AG
All three Italian banks declined to comment, though Banca Popolare di Milano's CEO said last week that the feedback he had got from the ECB in the one-to-one meeting was reassuring. Alpha and Millennium BCP also declined to comment, while the other banks could not immediately be reached.
Spanish Economy Minister Luis de Guindos said he was confident Spanish lenders would do well in the health checks, pointing to benefits from financial reforms after a property sector collapse left many banks in need of state aid.
(Reporting by Sarah White and Eva Taylor and Jonathan Gould in Frankfurt, Laura Noonan and Sudip Kar-Gupta in London and Michele Kambas in Nicosia, Blaise Robinson in Paris, additional reporting by Reuters buros, writing by Eva Taylor, Editing by John Stonestreet)