EBA Issues Updates on Stress Test Exercise for Banks in EU
EBA announced that the next stress testing exercise is expected to be launched at the end of January 2021 and its results are to be published at the end of July 2021. Earlier, EBA had postponed the stress testing exercise in light of the unprecedented disruptions caused by the COVID-19 outbreak. EBA also published a list with a tentative sample of participating banks, including the banks that were going to participate in the postponed 2020 stress test, with some adjustments to ensure sufficient coverage in terms of total assets as well as to reflect changed conditions for specific institutions.
From the listed sample of banks, UK banks have been excluded while their EU-27 subsidiaries have been included, as necessary. The final sample list can still be subject to adjustments, depending on possible mergers, divestments, and restructurings, among others. The 2021 EU-wide stress test will be carried out at the highest level of consolidation on a sample of 51 banks, of which 39 are from the Euro area, covering broadly 70% of the banking sector in the euro area, each non-Eurozone member states, and Norway.
Additionally, the Board of Supervisors of EBA have agreed on the preliminary timeline for the potential changes to the EU-wide stress test framework. A final decision on potential changes to the framework, which takes account of the feedback received on the discussion paper published in January 2020, is expected to be taken in second or third quarter of 2021. The implementation of any potential change will be possible for the 2023 EU-wide stress test.
Related Links
- Press Release
- Sample of Banks (PDF)
- Discussion Paper, January 2020 (PDF)
- Overview of EU-Wide Stress Testing
Keywords: Europe, EU, Banking, EU-Wide Stress Test, Timeline, Stress Testing, 2023 Stress Test, 2021 Stress Test, COVID-19, EBA
Featured Experts
Amnon Levy
Financial researcher; authority in credit portfolio management and AI/ML, risk-based pricing, climate and credit, CECL/IFRS 9; credit and ALM
Emil Lopez
Credit risk modeling advisor; IFRS 9 researcher; data quality and risk reporting manager
James Partridge
Credit analytics expert helping clients understand, develop, and implement credit models for origination, monitoring, and regulatory reporting.
Previous Article
US Agencies Extend Comment Period for Guidance on Resolution PlansRelated Articles
BCBS Consults on Principles for Operational Risk and Resilience
BCBS is consulting on the principles for operational resilience and the revisions to the principles for sound management of operational risk for banks.
FSI Note Discusses Challenges Associated with COVID Relief Measures
The Financial Stability Institute (FSI) of BIS published a brief note that examines the supervisory challenges associated with certain temporary regulatory relief measures introduced by BCBS and prudential authorities in response to the COVID-19 pandemic.
HKMA Announces Repayment Deferment Under Payment Holiday Scheme
HKMA, together with the Banking Sector Small and Medium-Size Enterprise (SME) Lending Coordination Mechanism, announced a ninety-day repayment deferment for trade facilities under the Pre-approved Principal Payment Holiday Scheme.
ESRB Paper Presents Alternative Approach to EBA Stress Test Proposal
The Advisory Scientific Committee of ESRB published a response, in the form of an Insights Paper, to the EBA proposals for reforms to the stress testing framework in EU.
MAS Announces Key Initiatives to Support Adoption of SORA
MAS announced several initiatives to support adoption of the Singapore Overnight Rate Average (SORA), which is administered by MAS.
BoE Updates Template and Definitions for Form ER
BoE updated the reporting template for Form ER as well as the Form ER definitions, which contain guidance on the methodology to be used in calculating annualized interest rates.
PRA to Extend Temporary High Balance Coverage Amid COVID Crisis
PRA published the policy statement PS19/20 on the final policy for extending coverage under the Financial Services Compensation Scheme (FSCS) for Temporary High Balance.
EBA Publishes Standards on Disclosure and Reporting of MREL and TLAC
EBA published the final draft implementing technical standards for disclosures and reporting on the minimum requirements for own funds and eligible liabilities (MREL) and the total loss-absorbing capacity (TLAC) requirements in EU.
EBA Releases Erratum for Phase 2 Package on Reporting Framework 2.10
EBA published an erratum for the phase 2 of technical package on the reporting framework 2.10.
EC Sets Out Updated Technical Information for Solvency II Calculations
EC published the Implementing Regulation 2020/1145, which lays down technical information for calculation of technical provisions and basic own funds.
