Both the European Central Bank (ECB) and the Basel Committee on Banking Supervision are working on plans to standardise the methods used to calculate bank's capital ratios. The ECB recently said that this work will take twice as long as first anticipated.
The expected rule changes will reduce the combined common equity tier 1 (CET1) ratios of the banks by 1.5% by 2018, or the equivalent of €137bn in capital, the Financial Times said.
Thirteen of the 35 banks are likely to fail to meet the minimum capital needs, the Financial Times said.
"One thing that is certain is banks will be constrained in lending,” Kian Abouhossein of JP Morgan told the newspaper.