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Portugal's banks are facing a combined shortfall of EUR6.95 billion in meeting the European Banking Authority's recapitalization target, EBA data provided by Portugal's Central Bank showed Thursday.

Four of Portugal's largest banks reported shortfalls: Banco Comercial Portugues SA (BCP.LB) is facing a EUR2.13 billion shortfall; Banco BPI SA (BPI.LB) a EUR1.389 billion shortfall; Espirito Santo Financial Group SA (BES.LB) a EUR1.597 billion shortfall; and state-owned Caixa Geral de Depositos SA a EUR1.834 billion shortfall.

The total is down from a combined EUR7.8 billion capitalization shortfall reported when the capital exercise was last carried out.

The announcement coincides with similar announcements made by other European banks who have also been asked to unveil whether they're on track to meet the EBA's recapitalization plan of achieving a Core Tier 1 capital ratio of 9% after adjusting the values of their government bond portfolios to reflect market prices.

This is part of a "capital exercise" under which banks have to demonstrate they are adequately capitalized, even in the context of the current stressed market conditions for sovereign debt.

Bank recapitalization is one element of a multiple-part effort to restore confidence in the credit of Europe's banks and sovereigns.

The EBA's announcement comes directly after the European Central Bank's monthly council meeting and immediately before a "make-or-break" meeting of EU heads of government aimed at saving the continent's monetary union.

-By Alex MacDonald, Dow Jones Newswires; +44 (00207 842 9328; alex.macdonald@dowjones.com