EBA Publishes Results of the 2018 EU-Wide Stress Test for Banks
EBA shows results of the stress tests conducted on bank in EU in 2018. The stress test shows that the 33 largest banks directly supervised by ECB have become more resilient to financial shocks over the past two years.
Overall, the EU-wide stress test covered 48 banks, representing 70% of banking assets in the EU. The 33 participant banks under the supervision of ECB account for 70% of euro area banking assets. Despite a more severe adverse scenario than in the 2016 stress test, the average common equity tier 1 (CET 1) capital ratio of all 33 banks after a three-year stress period was higher at 9.9%, up from 8.8% two years ago. Owing to their efforts to address legacy assets, along with the consistent build-up of capital in recent years, the average capital base of the 33 banks when they entered the stress test was much stronger, with CET 1 standing at 13.7%, up from 12.2% in 2016. One of the main features of the 2018 exercise was the implementation of IFRS 9. Banks provided the starting point according to actual figures at the end of 2017 and IFRS 9 restated figures. The negative impact of the first implementation of IFRS 9 on banks' aggregate CET 1 capital ratio is -20 basis points (bps)* on a fully loaded basis and -10 bps on a transitional basis.
Stress test helps the supervisor to determine Pillar 2 capital in its annual Supervisory Review and Evaluation Process (SREP). Supervisors ask banks to build up Pillar 2 capital as a prudential capital buffer, in addition to the legally required minimum capital. Pillar 2 is tailored to a bank’s characteristics, such as its business model, governance structure, or risk management framework. ECB is preparing the 2018 SREP decisions for the banks it supervises. In parallel to the EU-wide EBA stress test, ECB conducted its own stress test for banks that are under its direct supervision, but not covered in the EBA sample.
Related Links
Keywords: Europe, EU, Banking, Stress Testing, 2018 EU Stress Testing, IFRS 9, Regulatory Capital, Stress Test Results, SREP, ECB, EBA
Previous Article
PBC Publishes the 2018 Financial Stability Report on ChinaRelated Insights
|
News
BCBS Finds Liquidity Risk Management Principles Remain Fit for PurposeBCBS completed a review of its 2008 Principles for sound liquidity risk management and supervision. The review confirmed that the principles remain fit for purpose.
January 17, 2019
WebPage
Regulatory News
|
|
News
HKMA Urges Local Banks to Start Working on FRTB ImplementationHKMA announced that it plans to issue a consultation paper on the new market risk standard in the second quarter of 2019.
January 17, 2019
WebPage
Regulatory News
|
|
News
EBA Finalizes Guidelines for High-Risk Exposures Under CRREBA published the final guidelines on the specification of types of exposures to be associated with high risk under the Capital Requirements Regulation (CRR). The guidelines are intended to facilitate a higher degree of comparability in terms of the current practices in identifying high-risk exposures.
January 17, 2019
WebPage
Regulatory News
|
|
News
MAS Guidelines on Risk Mitigation Requirements for OTC DerivativesMAS published guidelines on risk mitigation requirements for non-centrally cleared over-the-counter (OTC) derivatives contracts.
January 17, 2019
WebPage
Regulatory News
|
|
News
BoE Publishes the Schedule for Statistical Reporting for 2019BoE published the updated schedule for statistical reporting for 2019. The reporting institutions use the online statistical data application (OSCA) to submit statistical data to BoE.
January 16, 2019
WebPage
Regulatory News
|
|
News
PRA Delays Final Direction on Reporting of Private SecuritizationsPRA and FCA have delayed the issuance of final direction, including the final template, on reporting of private securitizations, from January 15, 2019 to the end of January 2019.
January 15, 2019
WebPage
Regulatory News
|
|
News
SNB Updates Forms on Supervisory Reporting for BanksSNB published Version 1.7 of reporting forms (AUR_U, AUR_UEA, AUR_UES, AURH_U, AUR_K, AUR_KEA, and AURH_K) and the related documentation for supervisory reporting on an individual and consolidated basis.
January 15, 2019
WebPage
Regulatory News
|
|
News
BCBS Finalizes Market Risk Capital Framework and Work Program for 2019BCBS published the final framework for market risk capital requirements and its work program for 2019. Also published was an explanatory note to provide a non-technical description of the overall market risk framework, the changes that have been incorporated into in this version of the framework and impact of the framework.
January 14, 2019
WebPage
Regulatory News
|
|
News
EBA Single Rulebook Q&A: First Update for January 2019EBA published answers to 13 questions under the Single Rulebook question and answer (Q&A) updates for this week.
January 11, 2019
WebPage
Regulatory News
|
|
News
PRA Proposes to Amend Supervisory Statement on Credit Risk MitigationPRA published the consultation paper CP1/19 that is proposing changes to the supervisory statement (SS17/13) on credit risk mitigation.
January 10, 2019
WebPage
Regulatory News
|
