The European Central Bank (ECB) is planning to examine the €3.7tn worth of assets of the Eurozone's biggest banks as part of its planned stress tests and today UniCredit of Italy announced a record annual net loss of €14bn in 2013 as the country's biggest bank by assets did a spring cleaning on its balance sheet and ramped up writedowns in its fourth quarter, ahead of the stress tests.

Today the ECB issued a manual for the asset review that will examine the riskier assets in 128 Eurozone banks totalling 58% on average of their risk-weighted portfolios, with around 1,250 credit files on average at each bank due to be investigated.

"Generally, the majority of collateral will be revalued for all debtors selected in the sampling that do not have a third-party valuation less than one year old," the manual says.

Following UniCredit's report today, several other Italian banks are expected to report heavy losses because of extra provisions taken in the fourth quarter to prepare for review and stress tests.

Between now and August, national regulators will operate the review and estimates of banks' capital shortfall range from €280bn to as much as €770bn.

Past tests have been criticised as too lax and the main Irish banks passed them and then required sovereign capital to save them from collapse.

The Financial Times reports that German banks have pushed for residential mortgage loans to be exempt, on the grounds that the stability of the German property market removes the need for revaluations after the initial loan is made. The ECB will apply a minimum threshold, with certain smaller loans falling below the radar for revaluation.