The European Banking Authority said on Wednesday it was pleased with progress by banks in meeting tougher capital requirements as part of last year's European stress test of the sector.
The EBA conducted a stress test of banks in July 2011, following up with a review later in the year when additional requirements were imposed on some banks.
"The EBA is, in general, satisfied with the progress in the fulfilment of the July 2011 recommendation and notes that the actions taken include capital strengthening and adequate recognition of losses," the watchdog said in a statement.
The July test had a pass mark of 5 percent of core tier 1 capital, the main benchmark of a bank's health.
As the euro zone debt crisis worsened last year, a recapitalisation exercise was later carried out with a tougher threshold set for lenders.
The EBA said it is currently monitoring 71 banks to check if they meet the requirement of holding a temporary core tier 1 capital of 9 percent by the end of June.
EU finance ministers were meeting in Brussels on Wednesday to finalise the bloc's permanent new bank capital rules.
EBA Chairman Andrea Enria urged ministers not to water down the tougher new Basel III bank capital definitions agreed globally that come into effect from January 2013.