LONDON (REUTERS) - A health check of banks across the European Union showed that 24 lenders, all from the euro zone, were too weak to withstand a three-year recession in a test aimed at drawing a line under the single currency's area's protracted debt crisis.

Italy's Monte dei Paschi had the biggest capital hole to fill at 2.1 billion euros (S$3.39 billion) even after its money raising efforts so far this year.

The European Banking Authority (EBA), the EU's banking watchdog that coordinated the stress test of 123 banks, said on Sunday the lenders that failed to maintain a core capital ratio of 5.5 per cent at the end of the test, had a combined capital shortfall of 24.6 billion euros at the end of 2013.

Italy fared worst with nine of its banks having a total shortfall of 9.4 billion euros at the end of 2013. Monte dei Paschi had core capital ratio of minus 0.1 per cent at the end of the three-year test.

Three Greek banks, Eurobank Ergasias, National Bank of Greece and Piraeus Bank, had a combined shortfall of 8.7 billion euros. Three lenders from Cyprus had a total capital hole of 2.4 billion euros.

Many of the lenders have raised capital since the end of 2013 and the total shortfall shrank to 9.5 billion euros across 14 lenders by the end of September 2014, EBA said.

The euro zone banks now have two weeks to come up with plans for plugging any capital holes uncovered by the stress test within nine months.

The test has been billed as a make or break moment for Europe's banks after three previous exercises failed to root out weaklings that had to be rescued by EU bailouts.

Continued inability to find weak spots at banks in the euro zone would be particularly damaging to the European Central Bank, which carried out the stress test in the euro zone and becomes the main banking supervisor in the single currency area from next month.

The ECB scrutinised the balance sheets of 130 banks in the euro zone ahead of the stress test, a higher sample as it also includes subsidiaries of big banks while the EBA test looked at group holding companies.

Some 40 banks ended the test with capital ratios of below 7 per cent, the minimum level required under new global bank capital rules known as Basel III.

Among the narrow passes were Britain's Lloyds, Italy's Mediobanca and Germany's HSH Nordbank, all below 6.5 per cent.