Jan 31, 2020
The European Banking Authority (EBA) launched the 2020 EU-wide stress test. The EU-wide stress test will be conducted on a sample of 51 EU banks – 35 from countries under the jurisdiction of the Single Supervisory Mechanism (SSM) – covering roughly 70% of total banking sector assets in the EU and Norway, as expressed in terms of total consolidated assets as of end 2018. UK banks will be included in the sample as the 2020 EU-wide stress test takes place during the implementation period following the UK’s withdrawal from the EU.
The adverse scenario follows for the first time a ‘lower for longer’ narrative, a recession coupled with low or negative interest rates for a prolonged period. The EU real GDP would decline by 4.3% cumulatively by 2022, resulting in the most severe scenario to date. The EBA expects to publish the results of the exercise by 31 July 2020.
Further details can be found in the full press release here.