Very severe economic and market conditions would see a capital depletion of €265bn for EU banks, but their common equity tier 1 (CET1) capital would remain above 10%, according to the European Banking Authority’s (EBA) latest stress tests, published on July 30.
Stress-Testing
US banks show their mettle during stress tests
The 23 largest banks in the US passed the latest stress tests with flying colours and could stomach nearly $500bn in losses without breaching regulatory capital levels suggesting they have weathered the Covid-19 pandemic well.
ACPR finds French bank exposure to climate change to be moderate
French financial institutions will only be moderately exposed to climate change by 2050 said the Autorité de contrôle prudentiel et de résolution (ACPR), the Bank of France’s prudential regulation unit, in what it billed as the world’s first pilot climate stress test.
Will climate stress tests boost financial services resilience?
As governments and regulators ‘race to the top’ with steeper climate targets and stronger policy actions, questions remain about the resilience of the financial sector to climate change and whether it is doing enough to support the transition to a low-carbon economy. The upcoming climate stress tests may provide some, if not all, of the answers.
Stress testing for climate change could influence bank capital levels
Banks and insurers across the world are likely to face climate-related stress tests in the next two to three years as the issue rises up the regulatory agenda with implications for capital levels, Fitch Ratings said in a note on March 15.
Quarles says Covid complicates Fed’s stress test risk modeling
Government emergency programmes to help borrowers through the Covid-19 pandemic induced economic shock, though essential to the recovery, have nonetheless complicated stress test risk modelling, said a US Federal Reserve Board official.
Fed announces additional round of bank stress tests in response to Covid-19
The continued uncertainty around the Covid-19 pandemic has prompted the US Federal Reserve Board to announce another round of bank stress tests to see how large banks stand up against two scenarios featuring severe recessions.
Banks gear up for tougher stress tests
Covid-19 and climate change are sending supervisors back to the drawing board when it comes to the design of stress tests to ensure banks are fully prepared for an increasingly uncertain future
US Fed stress tests criticised for being confusing and inadequate
In recent years, stress tests by the US Federal Reserve have been relatively incident free, but this year’s exercise has run into sharp criticism in some quarters including from a former Fed member
Managing climate risk demands fresh thinking on stress tests
Risks related to climate change are increasingly being taken seriously by regulators and banks, but the modeling around these risks is complex and is still under development
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