The European Banking Authority (EBA) will review recapitalization blueprints from top names like Deutsche Bank and UniCredit.

The 31 were singled out in a healthcheck of 71 lenders last year as needing extra capital to lift core ratios to 9 percent by June.

The EBA meets on Wednesday and Thursday. The London-based authority signaled on Monday it was generally pleased with what it has seen so far though it was likely to request some changes.

"Whilst it is too early to comment on the feasibility of those plans, the EBA has been impressed with the banks' willingness to undertake all appropriate measures to meet the requirements set out in the EBA's recommendation," it said.

Regulators worried that UniCredit's struggle with a 7.5 billion euro capital increase in January would spur other lenders to offload risky assets to bolster ratios instead. Fewer risky assets on a bank's balance sheet means it does not need as much capital to hit the ratio target.

The EBA will study several areas as banks have options to plug the capital gap. They can retain earnings, shrink loans to customers, convert hybrid debt into equity, buy back their own bonds, sell assets, and cut dividends or staff pay.

The EBA should take a tough line on banks' assumptions, analysts say, particularly given more gloomy economic assumptions across Europe.

For example, Italy's Banca Monte dei Paschi di Siena is aiming to sell 1 billion euros of assets and the EBA could force it to have a back-up plan.

"The EBA is right to stand up and say 'are these plans do-able?' A number of the banks are unlikely to make their plans, and earnings are under further pressure, so some of those assumptions will have to go down," said Chris Wheeler, analyst at Mediobanca.

NO WINDOW DRESSING

Banks worldwide are being encouraged to rely less on external credit ratings for assessing how much capital they must set aside against risky assets.

Critics fear a shift by banks to use their own internal ratings model will tempt them to "window dress" by downplaying risks to reduce the capital needed to reach the EBA target.

The EBA is likely to accept a shift to an internal ratings model only if lenders began the switch before the watchdog unveiled its 9 percent capital target last November.

Another core EBA concern is to avoid banks making fire sales of assets at distressed prices to meet the June deadline, so some flexibility may emerge in this area too.

Banks, for example, may get some leeway if they can show the sale process is well underway, if an independent valuation has been made or there is evidence of initial pricing.

Most banks are likely to have to scale back how much capital they will generate from earnings in the fourth quarter of last year and the first half of this year.

For some that could cause a problem -- Germany's Commerzbank, for example, has said it is confident it can avoid state help to plug a 5.3 billion euro shortfall as long as there is no deterioration in the economy.

Banks have been pushing for some relief on the "temporary" buffer some are also required to build up against their heavy exposures to sovereign debt of euro zone countries like Greece, Portugal, Italy and Spain which is under pressure in the market.

The EBA, however, is unlikely to conclude this week that debt markets are back to normal and instead will continue keeping an eye on them, helped by the European Systemic Risk Board.

This week's two-day board meeting will be followed by meetings of each of the 31 lenders' college of supervisors -- the regulators from each country the bank operates in -- to examine the individual plans in greater detail.

A handful of banks could need to raise capital if their plans are not accepted, and may need to turn to the state for help. Analyst scrutiny is on Commerzbank, MPS, Banco Popolare, Millennium bcp, Bank of Cyprus and Marfin.

The aim is for all 31 plans to be signed off by early March.

($1 = 0.7646 euros)

(Editing by Helen Massy-Beresford)

• A Permanent Economic Emergency