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* No minimum threshold will be used in tests
* European Union countries will check 53 banks
* ECB will test 39 banks across 10 countries (Adds detail from supervisor comments)
By John O'Donnell
FRANKFURT, Nov 5 (Reuters) - Europe's banks will be testednext year to measure their financial resilience if the economyshrinks, regulators said on Thursday, although none can fail asthere will be no minimum capital hurdle.
The exercise follows many years of annual tests to assessthe capital strength of the banks following the financial crash,but it marks a new phase where banks are not immediately forcedto recognise and plug any new-found financial holes.
Some criticised earlier tests as too lenient -- Irishlenders, for example, were given a clean bill of health justmonths before the country almost went bust due to theirdifficulties. Greece's banks received a thumbs up as recently aslast year before political turmoil prompted a fresh examinationlast week.
Fifty-three banks will be assessed in the latest round ofchecks, to be launched in February next year. The EuropeanBanking Authority, which sets the standards for the examination,said the process would challenge banks' capitalisation plans.
The London-based authority said it would also make it easierto compare the resilience of banks across the European Union.The European Central Bank will probe banks in 10 of the 19countries using the euro.
Unpaid loans remain a problem for Europe's lenders, aseconomic growth in many countries grinds to a halt.
In Greece, the four top banks have more than 100 billioneuros of credit that is at risk of not being repaid.
Earlier in the week, Daniele Nouy, the ECB's chief bankswatchdog, gave a sense of the focus of supervision. She said theeuro zone central bank wanted to ensure banks have viablebusiness models and can manage 'non-performing' loans at risk ofnot being repaid, singling out property lending.
"The economic climate in the euro area poses challenges tobanks' profitability," Nouy said. "We know that some of thebanks within the euro area still face significant credit risk."
To see the list of banks being tested, see pages 93 and 94in the following EBA document: https://www.eba.europa.eu/documents/10180/1259315/DRAFT+2016+EU-wide+ST+methodological+note.pdf (Reporting By John O'Donnell and Francesco Canepa; Editing byCatherine Evans)
