Andrea Enria, chairman of the EBA and other officials of the London-based organisation, fielded questions from analysts angered at what were quickly described as an "inadequate" set of tests.
Mr Enria is understood to have outlined the difficulties the EBA faced in conducting the stress tests on the 91 European banks that took part. He was asked why just nine banks failed, requiring total new capital of €2.5bn (£2.2bn).
The EBA was clear in methodology papers it released on Friday that it had faced great difficulties getting different national regulators and banks to provide accurate data.
Describing the process as "constrained", the EBA admitted that figures given by the banks in some cases "materially" changed after being challenged. "It is clear the EBA is telling us it was unable to perform the type of tests it wanted to and considering the difficulties it faced it didn't do a half bad job," said one market professional.
Banks have said too much transparency about the size of sovereign debt holdings and likely losses could unnerve markets if EU leaders fail to come up with a lasting solution to the euro zone's fiscal woes.
Helaba said on Wednesday it would have passed the test if its "silent participation" hybrid debt were included after some design modifications, but this was rejected by the EBA.
The EBA's test only allows banks to mitigate any shortfalls in capital with plans for raising pure equity or mandatory restructuring plans agreed between January and April.
"The stress tests will give a degree of disclosure that we haven't seen before, and it's no surprise that German banks are reportedly squealing about giving so much information in a transparent standardised format," said Tamara Burnell, head of sovereign and financials credit analyst at M&G Investments.
Spain's Banco Pastor and CatalunyaCaixa will fail the test under the EBA's criteria, which rules out the use of generic provisions as core capital. That could see more Spanish failures, as banks there hold 27 billion euros ($38.3 billion) in generic provisions.
CASUALTIES
The EBA said its third pan-EU stress test of lenders since the financial crisis began will give more detail -- 3,000 data points compared with 100 last year.
The test has been criticised as being too mild, but investors said a bigger problem is that banks remain in denial about the need to recapitalise.
"The 'extend and pretend' policies of banks globally has failed to give bank managers the incentive to raise enough capital," said Neil Dwane, chief investment officer for Europe at RCM, a unit of Allianz Global Investors.
After steep share price falls, the cost of raising equity has soared and the ability to raise debt has collapsed, he noted.
This year's test requires banks hold more, better-quality capital, and need to raise capital if their core Tier 1 ratio falls below 5 percent of risk-weighted assets to be able to cope with a theoretical two-year recession.
Ten to 15 banks are likely to fail the test, euro zone sources told Reuters two weeks ago, with casualties expected in Spain, Greece, Germany and Portugal.
Six Spanish banks will fail, including five savings banks and a mid-sized bank, according to a local report. Spain is testing 21 banks, far more than any other, and is trying to restore confidence in the industry.
Most expectations are now for between five and 15 banks to fail, according to analysts polled by Reuters and other surveys. No large bank is expected to fall short.
"The most likely result is a similar outcome to last year, with a handful of banks (10 or less) failing, and a capital raising requirement of around 10 billion euros," Matt Spick, analyst at Deutsche Bank, said in a note this week.
Nine banks will fail and need to raise about 29 billion euros, according to the average opinion in a poll last month by Goldman Sachs of 113 investors, including long-only investors and hedge funds.
The test is aimed at shoring up investor confidence, which has been eaten away in the last two weeks by fears the euro zone crisis will engulf Spain and Italy. Europe bank shares have fallen 9 percent since July 1.
Last year's stress test was seen as a flop -- seven small banks failed, needing to raise just 3.5 billion euros, and Irish lenders had to be bailed out months after passing.
Andrea Enria, EBA chairman, this week fought back criticism, saying the test will provide "unprecedented" new insight. A lack of information was in contrast to data available to investors in U.S. banks, and was a "major shortcoming" in Europe.
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