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EBA publishes 2021 EU-wide stress test results

The objective of the exercise was to assess, in a consistent way, the resilience of banks to a common set of adverse shocks. The results are an input to the supervisory decision-making process and promote market discipline.

The EBA published on Friday evening, July 30, the results of its 2021 EU-wide stress test, global report and results for individual banks. The EBA’s exercise, that was planned for last year and was interrupted due to COVID-19 pandemic, was launched in January 2021 with a sample of 50 banks (representing ~70% of total banking assets in the EU and Norway).

The adverse scenario was based on a narrative of a prolonged COVID-19 scenario in a ‘lower for longer’ interest rate environment, in which negative confidence shocks would prolong the economic contraction.

Although the starting point was in a strengthened position, when compared with 2018, the increased severity of the adverse scenario led to a higher depletion in capital, comparing with the previous exercise.

In summary:

To see our analysis on the results, click here.

To see EBA’s summary of the results and the interactive dashboards click below:
Results
Summary dashboard
P&L, Capital and REA dashboard
Credit Risk & Securities dasboard
COVID-19 dashboard

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Two Portuguese banks participated in this year’s exercise - Caixa Geral de Depósitos and Millennium bcp - ranked 10th and 19th, respectively, from the 50 banks with the lowest impact on capital. As the first time they officially participated in the EBA exercise, Portuguese banks achieved better results than many of their international peers.

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