EBA issues 2018 EU-wide stress test draft methodology – including IFRS 9 impact

On 7 June, the European Banking Authority (EBA) published its 2018 EU-wide stress test draft methodology and templates for discussion with the industry.

·         The exercise will cover 70% of the EU banking sector and will assess EU banks' ability to meet relevant supervisory capital ratios during an adverse economic shock.

·         For banks starting to report under IFRS 9 in 2018, the 2018 EU-wide stress test takes into account the impact of the implementation of IFRS 9 on 1 January 2018 both in terms of starting point and projections.

·         The results will inform the 2018 Supervisory Review and Evaluation Process (SREP), challenging banks' capital plans and leading to relevant supervisory outcomes.  

·         The exercise will also provide enhanced transparency so that market participants can compare and assess the resilience of EU banks on a consistent basis.

Link to EBA Draft Methodology Note including the list of banks

We can support your organization in :

-      Updating internal stress testing methodology incorporating IFRS9 sensitivity analysis

-      Optimizing capital allocation and Risk Weighted Assets

-      Updating ICAAP and Recovery Plan to include IFRS9 impact

-      Review Capital Plan and Dividend Strategy

Feel free to contact us for a Stress Test workshop