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February 01, 2019

ECB published aggregate results for the 2018 stress test for all participating banks under its supervision. The results show that the 87 banks directly supervised by ECB have become more resilient to financial shocks over the past two years.

Despite a more severe adverse scenario than in the 2016 stress test, the average common equity tier 1 (CET1) capital ratio of all 87 banks after a three-year stress period was 10.1%, up from 8.8% two years ago. The results show that the 87 banks directly supervised by ECB have become more resilient to financial shocks over the past two years. Looking at the 54 medium-size banks tested solely by ECB, the results show that they have become better capitalized, increasing their ability to absorb financial shocks. In addition to the EBA sample (33 banks), which covers about 70% of euro area banking assets, they represent a further 9% of banking assets in the euro area. Despite increased resilience overall among medium-size banks, challenges remain for euro area banks and ECB will monitor the progress of work on business models and legacy issues.

The 87 banks covered in the report include 33 euro area banks that were part of the EU-wide stress test coordinated by EBA. ECB conducted additional stress tests on 54 significant institutions, which it directly supervises and which were not part of the EBA stress test. Both sets of results form this aggregate report. The reference date for the 2018 stress test was December 31, 2017. ECB applied largely the same methodology as EBA when stress testing the 54 medium-size banks. Some significant banks directly supervised by ECB were not part of either stress test, mostly because they are subsidiaries of banks already covered by the EBA exercise or in the process of merging or restructuring. The results of these stress tests will contribute to the Supervisory Review and Evaluation Process (SREP) under the Single Supervisory Mechanism (SSM) 


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Keywords: Europe, EU, Banking, Stress Testing, 2018 EU Stress Testing, SSM, Significant Institutions, EBA, ECB

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