European bankers will be anxiously awaiting investor reaction to the results of the so-called stress tests which showed better-than-expected results when they were released over the weekend.
However, analysts were yesterday criticising the tests for being less than rigorous and Opposition politicians throughout Europe were warning that a full overhaul of the European banking system was still necessary.
All but seven of the 91 banks tested in 20 countries passed the tests.
Investors are expected to focus on the dozen or so banks that just made the cut when the markets reopen later tonight, New Zealand time.
The results were published by the London-based Committee of European Banking Supervisors at 4am on Saturday (NZ time).
The New Zealand market will be the first in the world to get a chance to react to the tests today.
Craigs Investment Partners broker Peter McIntyre said yesterday that the New Zealand markets would follow the lead of the Australian banking sector when the Australian financial markets opened at noon (NZ time).
"The tests were all a bit of a yawn really. I don't think they will set our markets on fire.
"We will be guided by what happens in Australia and later by the European markets.
"Given the Dow Jones finished up on Friday, the markets could continue up on the belief that the tests are done and there were far less banks failed than expected."
The European futures market would give a clearer guide when it opened today, he said.
A German website, DW-World.
DE, quoted German Finance Minister Wolfgang Schaeuble as celebrating the test results as a sign that German banks were "robust and resistant".
Green Party financial spokesman Gerhard Schick warned that German banks were and remained unsteady.
The president of the German Institute for Economic Research, Klaus Zimmermann, expressed fears the positive results might give the "fatal impression" that a full overhaul of the bank system was no longer necessary.
"Unlike in the United States, the necessary European financial reforms haven't even been fully discussed, let alone finalised or implemented," Dr Zimmermann told the Handelsblatt website.
Economists throughout Europe were warning that Europe had wasted an opportunity by not pushing harder criteria and by leaving crisis scenarios out of the tests, such as a real estate crash, the collapse of raw goods markets or total defaults by a eurozone state - as could have occurred in Greece this year.
The results were expected to have the intended effect of calming investors but were seen as a wasted opportunity to clean up the banking sector.
The euro fell against the US currency as a result of the majority of European banks passing the regulatory tests.
In response, the European Union said the tests were tough and showed its banking system was resilient enough to weather a slower economy and more turbulence on financial markets.
Germany's already nationalised lender Hypo Real Estate Holding AG failed the strength test, but that had been expected.
Bundesbank vice-president Franz-Christoph Zeitler said that in the regulators' view, no other German bank needed further capital.
Markets could see it differently.
Five unlisted Spanish savings banks failed, too, their finances battered by the collapse of a property boom: Diada, Unnim, Espiga, Banca Civica, and Cajasur, which was bailed out by the Bank of Spain in May.
Greece's ATE bank also failed and confirmed that it would go ahead with a capital-raising exercise.
In total the seven banks have to raise 3.5 billion ($NZ6.2 billion) to shore up their finances, the committee of banking supervisors said.
Mr McIntyre said that before the results were released, there was an expectation that up to 100 billion might be needed for the banks to recapitalise.
He questioned the strength of the tests.
Policymakers around Europe hailed the process as confirmation that Europe's banking system was in good health despite a government debt crisis and the deepest recession since World War 2.
The European Union said the results "confirm the overall resilience" of the Continent's banking system.
