Banks in the eurozone have about €100 billion of bonds issued under British law that they might not be able to use as buffers to absorb losses after Brexit, the bloc's banking watchdog said on Thursday.

If no agreement is found between Britain and the EU on mutual acceptance of these outstanding bonds to absorb losses, euro zone banks will have to issue new bonds to cover likely capital gaps.

The watchdog, the Single Resolution Board, said the outstanding bonds have been issued by banks from several eurozone countries, including Italy, Germany, France and Finland.