Bank of Ireland has described its capital position as strong following a Europe-wide stress test which identified both it and AIB as among the weakest financial institutions.

In a statement, Bank of Ireland said that its capital position was strong and that it continues to generate capital through its operations.

The statement on Saturday evening said that the bank expects to maintain sufficient capital to meet, at a minimum, applicable regulatory capital requirements plus a management buffer.

In a statement on Friday, AIB said it was “well capitalised” and back “generating capital” and that the tests were based on its 2015 balance sheet strength. It has since recorded a €1 billion profit for the first half of this year.

AIB added that it had undergone “fundamental restructuring” in recent years and was now “sustainably profitable”.

Under adverse scenarios applied by the London-based European Banking Authority, AIB would have a fully loaded Common Equity Tier 1 (CET1) ratio of 4.3 per cent at the end of 2018, below the 5.5 per cent level that markets and regulators would typically expect it to hold.

For Bank of Ireland, the equivalent figure would be 6.1 per cent.

This does not mean that the Irish banks have failed the test, as the EBA decided not to use pass-fail terminology in these stress tests, which examined 51 institutions across 15 countries.

Both Irish banks comfortably pass the 5.5 per cent hurdle for the 2015 year end with AIB at 13.1 per cent and Bank of Ireland at 11.3 per cent.