One in five European banks have failed crucial tests of their financial strength, leaving a €25bn (£19.6bn) capital hole in the continent’s banking system at a time of renewed fears that the five-year long eurozone crisis may be flaring up again.

European banking regulators published the test results on Sunday. The findings put particular focus on Italian banks – nine of which failed and contributed €9.4bn to the overall shortfall.

No UK banks failed although they are being subjected to fresh tests by the Bank of England which will publish the results on 16 December.

In Greece, three banks failed the stress tests set by the European Banking Authority, the overarching European banking regulator, with the same number failing in Cyprus. Ireland’s Permanent TSB failed.

The world’s oldest bank, Italy’s Banca Monte dei Paschi di Siena, was left with a shortfall of more than €2bn to fill in the coming nine months.

The tests by the EBA were imposed on 123 banks, including the UK’s bailed-out Lloyds Banking Group and Royal Bank of Scotland. They were intended to draw a line under concerns about the health of Europe’s banking system by showing if banks had enough capital to withstand a series of economic shocks, such as a rise in unemployment, a sharp fall in house prices or declining economic growth. Twenty-four banks failed the examination.

The EBA’s tests were conducted alongside an analysis of banks in the single currency area by the European Central Bank, which takes over regulation of eurozone banks in November. It found that 25 banks from 11 countries failed to stand up to its scrutiny of the strength of assets on its books.

Some of the banks which failed the EBA’s tests have already taken steps to improve their financial strength, raising more than €55bn of new capital. The regulator said that if these efforts were taken into account the number of failed banks falls to 14, which are left with an urgent need to raise €9.5bn.

Salman Ahmed, strategist at Lombard Odier Investment Managers, said: “Everyone will be looking hard to decide whether the €9bn is too little to shore up the banks that are at risk. [But] investors have been handed plenty of data on the banks’ assets and are now in a position to judge for themselves.”

The results are being published at a time when the eurozone is facing renewed questions about its financial strength, particularly Germany, which has cut its growth forecasts for this year. Chancellor Angela Merkel is facing calls to boost public sector spending as a way to prevent the eurozone falling into a triple-dip recession.

Officials in the eurozone hope that clarity about the health of the banking system will encourage the banks to start pushing more loans into the economy to boost growth.

Vitor Constancio, vice-president of the ECB, said the results of the eurozone banks “guarantee that going forward the economic recovery will not be hampered by credit supply restrictions”.

But Howard Archer, chief UK & European Economist IHS Global Insight, questioned this assertion: “Even if banks do become more prepared to lend now that the stress test are out of the way, it is very far from certain that there will be increased demand for capital from the private sector in many countries given current eurozone weakness, faltering business confidence and the uncertain outlook amid geopolitical tensions.”