The 25 banks that failed the health check included four which own subsidiaries in eastern Europe. Some banks that passed were found to have overvalued their assets in the region by a significant margin, something that will force them to hold more capital and makes them likely to eventually face extra losses.

"The Greek banks have relatively profitable units in eastern Europe and selling them off looks like the easy and fast way to ensure capital. This is a possible option," said Lachezar Bogdanov, an economic analyst with Sofia-based think-tank Industry Watch.

Greece's Eurobank (>> Eurobank Ergasias SA), Piraeus Bank (>> Piraeus Bank SA) and National Bank of Greece (>> National Bank of Greece), all failed the ECB's test based on the narrow definition of not having enough capital at the end of last year. They will have to issue little if any new equity, but they will have to stringently stick to their restructuring plans which involve reducing Balkan and other international holdings.

Central European units were a drag on Raiffeisen (>> Raiffeisen Bank International AG) and (>> Erste Group Bank AG) Erste Bank, who were found by the ECB to have overvalued their assets in the region, along with Norway's DNB (>> DNB ASA) which the ECB said had significantly overvalued assets in its unit in Estonia.

The overall picture from the stress tests was more positive, showing banks in the European Union's former Communist member states were sound, cementing a pattern since the 2008 crisis for the region's subsidiaries to perform better than some of their parents.

QUICK CAPITAL BOOST

Banking industry insiders in eastern Europe have said for months the stress tests could be the trigger for Greek lenders to sell subsidiaries, since the parents were already in difficulty following the Greek debt crisis.

An official at NBG told Reuters it plans to sell a small stake in Turkey's Finansbank and divest other non-core assets, but does not plan sales of its Balkan units. An official at Eurobank said some light divestment of its Balkan units is included in restructuring plan, as did an official at Piraeus.

A former Bulgarian central bank official, who spoke on condition of anonymity, said sell-offs by Greek banks that had been talked about for some time were likely now to be back on the agenda.

But he said finding a buyer willing to make a good offer may be hard because a run on Bulgarian lender Corpbank (>> Korporativna targovska banka AD Sofia) earlier this year has made the sector less attractive.

Representatives of National Bank of Greece's United Bulgarian Bank and Eurobank Bulgaria declined to comment on whether their parents might sell them. Piraeus Bulgaria was not available for comment.

A sell-off in neighboring Romania may also make sense for some Greek lenders.

"They are pretty well capitalized in Romania because of the central bank's rule, so their parent banks could make them candidates for sale," said a banking sector analyst, who did not want to be named because of the sensitivity of discussing rival banks' intentions.

Eurobank Romanian unit Bancpost and National Bank of Greece unit Banca Romaneasca declined to comment. Piraeus Bank Romania said its parent in Athens may issue a statement on Monday.

A Warsaw-based analyst said on Sunday Portugal's Millennium BCP (>> B. COM. PORTUGUES), which failed the test, may reduce its stake in its Polish business Bank Millennium (>> Bank Millennium SA), but a spokesman for BCP in Lisbon said no sale of the Polish unit was planned.

DRAG ON PARENTS

On the other side of the equation, exposure to parts of central Europe was a liability to some euro zone banks.

Stress test data on Norway's DNB Bank (>> DNB ASA), which passed the test, showed that the ECB's view that it had overvalued assets in its Estonian bank resulted in the largest reduction of its critical equity ratio amongst the 130 banks reviewed.

Austrian lenders Erste and Raiffeisen, which are heavily exposed to central Europe, passed the stress tests, but Austrian central bank governor Ewald Nowotny said Hungary and Ukraine were throwing up issues for banks under his supervision.

Ukraine's economy is shrinking because of fighting with pro-Moscow separatists while Hungary is making banks foot the bill for a relief scheme for holders of foreign currency mortgages.

Nowotny said of the Hungarian market: "not least for political reasons, it now clearly has problems."

In a statement, Erste said the increased risk provisions it had already put in place because of the European Central Bank's Asset Quality Review (AQR) were mainly related to Hungarian and Romanian assets.

The AQR stress test data for Raiffeisen listed, among the portfolios where the bank had to make the biggest adjustments, Hungarian resident real estate, the type of loans that fall under the government's relief scheme.

(Additional reporting by Marcin Goettig and Pawel Florkiewicz in Warsaw, Matthias Williams in Bucharest, Andrei Khalip in Lisbon, Michael Shields in Vienna and George Georgiopolos in Athens; Writing by Christian Lowe; Editing by Laura Noonan and David Evans)

By Tsvetelia Tsolova and Radu-Sorin Marinas