26 October 2014

EBA published 2014 EU-wide stress test results of 123 banks

In preparation for the stress test, EU banks have made significant progress in strengthening their capital positions, as the starting CET1 ratio levels show. Between January and September 2014 alone, they have raised further EUR 53.6 bn of equity (EUR 39.2 bn net of repayments and buybacks) and 39.1 bn of contingent convertible instruments (both additional Tier 1 and Tier 2).

The 2014 EU-wide stress test results show an overall impact of the adverse macroeconomic scenario on the CET1 ratio of 260 basis points over 3 years, with CET1 decreasing from 11.1% in 2013 to 8.5% in 2016. The joint effect of the AQR and the stress test is 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 main drivers for this impact are credit risk losses, which account for 440 basis points of CET1 ratio decrease and an increase in total risk exposure (110 basis points).

The impact of the stress test on banks' capital positions is assessed taking into account the national transitional arrangements provided for in the Capital Requirements Directive (CRDIV) and Capital Requirements Regulation (CRR). However, to ensure consistency and comparability, the EBA is, for the first time, disclosing the impact of the stress test also on the future fully implemented CRDIV/CRR capital ratios. This additional disclosure will help market participants better understand the pathway towards the full implementation of the CRDIV/CRR. For the banks in the sample, the fully loaded CET1 ratio in 2016 under the adverse scenario would be 7.6%.

Acting as a central data hub for the entire EU, the European Banking Authority (EBA) is publishing both aggregate results of the EU-wide exercise and granular data for each bank, including detailed information at both the starting and end point of the exercise, under the baseline and the adverse scenarios.

Competent authorities, including the ECB for banks in the euro area, have been responsible for assessing the quality of the data submitted by banks and the reliability of the results; they are also responsible for identifying appropriate supervisory actions that banks will be asked to take to address the vulnerabilities identified in the exercise, as deemed appropriate.

Press release

Full report

Stress test results page 2014

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