On 5 November 2018, the European Banking Authority (EBA) published the results of its 2018 EU-wide stress test, together with frequently asked questions.
The stress test covered a sample of 48 banks in 15 countries in the EU and EEA at the highest level of consolidation.
One of the main features of the stress test was the implementation of International Financial Reporting Standard (IFRS) 9. Banks were required to provide the starting point according to their actual figures at the end of 2017 and their IFRS 9 restated figures.
A table summarising the key metrics and results of the exercise can be found on page 9 of the stress test results.
The stress test exercise does not include a defined pass/fail threshold. However, the 2018 EU-wide stress test is an important source of information for the purposes of the supervisory review and evaluation process and for setting Pillar 2 guidance. The results of the stress test will assist Member State competent authorities in assessing banks’ ability to meet applicable prudential requirements under the stress scenario. Furthermore, the results will form a solid ground for a discussion between supervisors and individual banks, in order to establish relevant management actions so as to strengthen their capital planning and ensure that the banks will be above the applicable capital requirements under stress.