However, if loan loss charges are more severe and a markdown of 40 percent is applied on Greek debt, their number would rise to 22, the note also said.
But markets need not give in to doom and gloom once those results are published, analysts told CNBC.
"Market expectations I think are veered to the negative side," Bob Parker, senior advisor at Credit Suisse, said. "A lot of bad news is discounted already in the market."
Even if Greek banks, Spanish cajas and German Landesbanken were to fail the stress test, they would have no problems raising capital, according to KBW analysts.
Greece has 10 billion euros set aside from its 110 billion euros IMF/EU bailout, Spain can expand its Fund for Orderly Bank Restructuring (FROB) to 99 billion euros and Germany has 52 billion euros of unused capital in its Financial Market Stabilization Fund (SoFFin) fund, they said.
Finally if stress tests are "so overwhelming" that a country cannot issue debt to inject capital into its banks, it could turn to funds from the EU, KBW analysts said.
But markets will not look only to capital requirements. Transparency will be very important – and here, the omens are not good, analysts said.
The EU is faced with a "damned if you do, damned if you don't" situation where if the stress tests are too lenient they would lose their credibility and if they are too harsh they would potentially scare investors.
Sovereign Debt Exposure
Investors are mostly interested to see details about each bank's exposure to sovereign debt, since markets have been roiled by risks of default during a good part of spring and summer. But they are not likely to get them, some analysts said.
"The level of disclosure is likely to be similar to the one of US stress tests last year. They did not provide a full breakdown of exposure, only assumptions of loss ratios and impact," Ramirez said.
Meanwhile, managing investors' expectations is in full swing.
German bank Hypo Real Estate will likely be among the banks to fail the test but this is not relevant for the nationalized lender, sources told CNBC. Moreover, if HRE were to pass the test, questions should be asked on how stringent were they, the sources added.
José Oliu Creus, chairman & CEO of Banco Sabadell, told CNBC he was confident that his bank will pass the test. (Click here for full interview)
BPI CEO Fernando Ulrich said that he is relaxed about the news his bank will get Friday. "I think most of the fears regarding European sovereign debt were exaggerated and we continue to invest in European sovereign debt," Ulrich added. (Click here for full interview)
NBG's chairman told CNBC that his bank will pass. (Click for video interview)
Other big banks have already expressed their confidence that they will pass the stress tests.
European banking stocks were higher Thursday afternoon, as investors covered short positions ahead of the release of the tests. Greece's EFG was leading the pack with a surge of 8 percent, followed by Alpha Bank and National Bank of Greece, up 6 and 5 percent respectively.
- Correction: A previous version of this story listed Turkish BKT as failing the KBW test, instead of Bank Inter Portugal.