RiskTech Forum

EBA issues 2020 EU-wide stress test methodology

Posted: 26 June 2019  |  Source: EBA


The European Banking Authority (EBA) published today the 2020 EU-wide stress test draft methodology, templates and template guidance, which will be discussed with the industry. The 2020 exercise will assess EU banks' resilience to an adverse economic shock and inform the 2020 Supervisory Review and Evaluation Process (SREP). The methodology covers all risk areas and builds on the methodology prepared for the 2018 exercise, while improving some aspects based on the lessons learnt. The preliminary list of institutions participating in the exercise as well as the timeline are also released today.

The 2020 EU-wide stress test will be carried out at the highest level of consolidation on a sample of 50 banks, of which 38 from the Euro Area, covering broadly 70% of the banking sector in the euro area, the non-Eurozone Member States and Norway. No single capital threshold has been set for this exercise as banks will be assessed against relevant supervisory capital ratios under a static balance sheet and the results will be an input to the SREP, under which decisions are made on appropriate capital resources and forward looking capital plans.

The final methodology will be published by the end of the year. The EU-wide stress test will be  launched in January 2020 and the results published by the end of July.