On 7 November 2019, the European Banking Authority (EBA) published the final methodology and draft templates for its 2020 EU-wide stress test along with key milestones of the exercise.

The objective of the stress test is to provide EU supervisors, banks and other market participants with a common analytical framework to consistently compare and assess the resilience of EU banks and the EU banking system to shocks, and to challenge the capital position of EU banks.

Key milestone dates of the 2020 EU-wide stress test exercise include:

  • launch of the exercise at the end of January 2020;
  • first submission of results to the EBA at the beginning of April 2020;
  • second submission to the EBA in mid-May 2020;
  • final submission to the EBA in mid-July 2020; and
  • publication of results by end-July 2020.

The stress test will be carried out on a sample of banks covering broadly 70% of the banking sector in the euro area, each non-euro area EU member state and Norway. The EBA notes that UK banks will be included in the sample as the UK will be subject to EU law when the stress test commences. However, if the UK leaves the EU during the exercise then the UK banks will be removed from the sample.