The Wall Street Journal has been analyzing the results of the European banking stress tests and wrote in a story published Tuesday that "some banks didn't provide as comprehensive a picture of their government-debt holdings as regulators claimed."
The euro fell from its 3-week high versus the dollar, as the report reignited fears that the European debt and banking crisis is not over.
Some "banks excluded certain bonds, and many reduced the sums to account for 'short' positions they held—facts that neither regulators nor most banks disclosed when the test results were published in late July," according to the article.
The paper writes that it is impossible to gauge the number of banks that excluded part of their sovereign debt holdings, but singles out Barclays and Credit Agricole, which the paper claims reduced by a significant amount their exposure to government debt.
Barclays and Credit Agricole said they were acting in accordance with the rules set out by the European authorities, the paper wrote.
Pedro De Noronha, managing partner at Noster Capital, told CNBC last week that the stress tests made him laugh.
"We only stress tested what the banks told us, I did not see anyone testing until they had gone broke," said Noster who is shorting five major European banks.
"When I look at Tier 1 capital ratios, I find things propping them up that are not assets that can be drawn on in a crisis," he said. "The real capital 1 ratio of some major banks is just 1.7 percent."
Muted Reactions
Following the release of the stress tests on July 23rd, when only seven banks of the 91 tested failed, investors' attention came off the banks and turned towards issues in the US and Chinese economies.
This is unlikely to change following the Wall Street Journal article, Simon Derrick from Bank of New York Mellon said.
"Firstly the relatively muted reaction in the currency markets tells you that no-one was that surprised that the stress tests where designed to present the best possible picture," Derrick told CNBC.com.
"Secondly the focus of the market has shifted since the results where released. The article makes it clear the banks followed the instructions they where given, so the tests themselves where designed to give a positive picture," he said.
"The market is now more worried about inflation fears than structural fears in Europe following big jumps in food prices," Derrick added.
"If the sovereign investors like China start to worry about their euro holdings then I would worry about Europe again, but the market has moved on for the time being. The current market reminds me of the second half of 2007 or 2002," he said.
"That does not mean 2011 will look like 2008 or 2003 but despite major problems out there, asset prices are going nowhere, as they did in those years," Derrick added.
