Austria's part-nationalised Volksbanken failed European banking stress tests, while five other Austrian banks passed without problems. 

The Association of Volksbanks - which includes the regional banks that own a majority of flagship Volksbanken - faced a capital shortfall of €865m under the tests that used figures for the end of 2013 as the benchmark. 

The Austrian National Bank said the capital shortfall was for 2016 and did not reflect restructuring steps, and that Volksbanken met regulatory standards at present. 

Volksbanken chief executive Stephan Koren said the result was not a surprise, noting the bank had said repeatedly the group would need additional capital over the next few years. 

Volksbanken had already announced plans to wind itself down to avoid a looming capital crunch it was struggling to plug. 

Austrian National Bank Vice Governor Andreas Ittner said the exercise underscored the central bank's call for banks to bulk up their balance sheets and improve profitability.

Austrian officials had signalled in advance that Austrian banks except Volksbanken were expected to pass the test. 

Like the big Austrian banks, two Russian banks based in Austria will fall under direct ECB supervision as of next month.

Volksbanken had already announced plans to hand that role to a fellow bank in the group and then wind itself down to avoid a looming capital crunch it was struggling to plug. 

Austrian National Bank Vice Governor Andreas Ittner said the exercise underscored the central bank's call for banks to bulk up their balance sheets and improve profitability.

Austrian officials had signalled in advance that Austrian banks except Volksbanken were expected to pass the test. 

Like the big Austrian banks, two Russian banks based in Austria will fall under direct ECB supervision as of next month.