Nearly a third of European Union banks being tested for their resilience in bad markets may need some outside support, credit rating agency Moody's said on Wednesday.

The European Banking Authority (EBA) was expected to announce the results of its stress test next week. Analysts expect more failures than the seven recorded last year as regulators seek to boost credibility in the exercise.

"Moody's expects the banks that fail the EBA stress test will be among those lower-rated banks, or among the non-rated banks included in the EBA stress test", it said.

"The health check, aimed at restoring investor confidence in a sector hit by the eurozone debt crisis, weaker returns for investors and regulatory uncertainties, should have positive effects for banks", Moody's said.

Press release