The EU-wide stress test is designed to provide supervisors, banks and other market participants with a common analytical framework to consistently compare and contrast the resilience of EU banks under adverse market conditions across a sample of 123 banking groups from 22 countries.
The European Banking Authority (EBA) has now published a report concerning the results of the 2014 EU-wide stress test. The report summarises the aggregate results of the exercise. The report’s annex also contains the resulting capital ratios on a bank-by-bank basis. In addition to the report, the EBA has published granular data for each bank within the exercise.
The report notes that in preparation for the stress test, EU banks made significant progress in strengthening their capital positions, as the starting common equity tier one (CET1) ratios show. Between January and September 2014, the banks raised a further EUR 53.6bn of equity and EUR 39.1bn of contingent convertible instruments (both additional Tier 1 and Tier 2).
The stress test results show that that overall impact of the adverse macro-economic scenario on the CET1 ratio was 260 basis points over 3 years, with CET1 decreasing from 11.1% in 2013 to 8.5% in 2016. The joint effect of the asset quality reviews and the stress test was 300 basis points Over the three-year horizon of the exercise, 24 banks would fall below the 5.5% CET1 threshold and the overall shortfall would total EUR 24.6 bn.
The supervisory reaction for the individual banks based on the results of the stress test exercise is the responsibility of Member State competent authorities.
View EBA publishes 2014 EU-wide stress test results, 26 October 2014