FRANKFURT, Germany (AP) -- The European Central Bank says 13 of Europe's 130 biggest banks have flunked an in-depth review of their finances and must increase their capital buffers against losses by 10 billion euros ($12.5 billion).

Journalists stand in the council meeting room in the 41. floor, in the new headquarters of the European Central Bank during a media tour at the construction site in Frankfurt, Germany (AP Photo/Jens Meyer)

The ECB said 25 banks in all were found to need stronger buffers - but that 12 have already made up their shortfall.

The remaining 13 now have two weeks to tell the ECB how they plan to increase their capital buffers.

The ECB checked the worth of bank holdings and subjected banks to a stress test that simulates how their finances would fare in an economic downturn. The exercise is aimed at strengthening the banking system so it can provide more credit to companies and boost the weak European economy.

The 13 banks that fell short included Greek banks Eurobank and National Bank of Greece, the Hellenic Bank of Cyprus, Franco-Belgian Dexia, Austria's Oesterreichischer Volksbank Verbund, Ireland's Permanent TSB, Portugal's Banco Comercial Portugues, as well as the two Slovenian banks Nova Ljubljanska Banka and Nova Kreditna Bank Maribor, and the four Italian banks Monte dei Paschi di Siena, Banca Carige, Banca Popolare di Milano and Banco Popolare di Vicenza.

The ECB says Eurobank, National Bank of Greece, had no or practically no shortfall due to later measurements, and that Nova Ljubljanska Banka and Nova Kreditna Banka had no need to raise more capital due to restructuring this year. Dexia is already being restructured with a state guarantee and does not need to raise more capital despite failing.

The bank with the biggest shortfall was Italy's Monte dei Paschi di Siena, which was found to have a capital shortfall of 2.11 billion euros. Most of the other banks that failed were short amounts less than 1 billion euros and in several cases less than 200 million euros.

The asset review and stress tests pave the way for the ECB to take over on Nov. 4 as the Europe's central banking supervisor. The test is supposed to make sure hidden troubles in the system are fixed before landing in the ECB's lap.

The ECB's new role is aimed at strengthening the euro currency union by toughening oversight of banks and keeping their troubles from dumping large losses on national governments' finances through bailouts. The ECB is taking over as supervisor for the biggest banks from national supervisors who were considered to be too likely to take it easy on their home banks and not step in to ward off problems. National supervisors will still look after smaller banks.

The test is also aimed at weeding out so-called zombie banks who are too crippled by hidden losses to make new loans to companies and have stayed in business thanks to tolerance from national supervisors and by rolling over loans that aren't being repaid.

Banks are key to the functioning of the European economy because they are where most firms - especially small and medium-sized ones - go for the credit they need to expand and operate. In the United States, companies turn more often to financial markets by selling bonds to raise money.

Improving the flow of credit is key to getting the European economy out of its stagnation. The 18 countries that use the euro currency showed no growth at all in the second quarter, after four quarters of weak recovery from a crisis over too much government debt.

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