2011 hasn't gotten much easier for the EU.

After a rough year of bailouts, bank nationalizations, and turmoil between member-states, the new year doesn't appear to be starting much different. Portugal, by most accounts, is only days away from having to ask for a bailout of its own. No one has crossed Belgium or Spain off the list of bailout recipients either. And on top of all that, the EU is facing near-term inflationary problems driven by higher prices for fuel, food, alcohol, and tobacco. This could mean interest rates could increase quicker than most analysts anticipated, which could hamper growth in a region that is already starving for some sort of economic boost.

Stress tests: Round 2
Despite the rocky road that 2011 has brought, EU authorities are planning a second round of stress tests -- a follow-up to last summer's tests of 91 different lenders in the Eurozone. This was established as a way to try and calm the market's fears about default and the ability of EU banks to maintain sufficient capital ratios. After Ireland had to be bailed out late last year, and now that Portugal is again on the brink of collapse, investors are running for the hills, increasing bond spreads and making it more difficult for troubled countries to raise cash. The hope is that the second round of tests will be more transparent and will also be more stringent.

The tests were set to be done this spring, yet the more and more things seem to fall apart, the more pressure there is to speed up the process and pass the tests earlier.

An opportunity or a trap?
Depending on how the banks fair this time around -- last time most banks passed, but the requirements were pretty loose -- investors could see a nice uptick in share prices if confidence gets restored in the marketplace. Here are five banks that could be directly affected by the stress tests, and that have seen massive share price declines in the last three months:

Stock

3-Month Price Decline

P/B Ratio

National Bank of Greece (NYSE: NBG)

(34%)

0.55

Bank of Ireland (NYSE: IRE)

(32%)

0.33

Allied Irish Banks (NYSE: AIB)

(32%)

0.07

BBVA (NYSE: BBVA)

(20%)

1.01

Banco Santander (NYSE: STD)

(14%)

1.08

Source: Yahoo! Finance.

As American banks like JPMorgan Chase (NYSE: JPM) have reported ever-higher earnings, they've seen the benefit of their share prices rise over the past three months; quite a stark contrast from the sentiment and reporting that's going on in the EU. JPMorgan and many other U.S. banks got through their own set of stress tests soon after the financial crisis began in 2008 and have since stabilized. Investors, I don't think, are fearful anymore about America's big institutions (although maybe I'm taking a giant leap of faith on that statement).

So could the second round of stress tests do for the EU banks what our own stress tests did for U.S. banks? If you think that's possible, some of the banks listed above could be a good grab at such dirt cheap prices. Granted, they are all riskier plays -- not good investments for someone who wants sound sleep at night. However, I wouldn't nix them from your watchlist all together, especially well capitalized banks like Banco Santander.

What do you think? Can any of the EU banks above wake up from their current nightmare?

Feel free to sound off in the comments below, or add them to your watchlist to get the latest commentary and analysis.

Jordan DiPietro owns shares of National Bank of Greece. The Fool owns shares of JPMorgan Chase. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.