Stress test: Banks are prepared for possible crises

2023-07-28 17:10:40

Although the financial groups would lose 271 billion euros in capital buffer within three years in the assumed scenario, they could still support the economy even in such a serious economic crisis. These are the results of the stress test announced by the European Banking Authority (EBA) on Friday.

The EBA had simulated a crisis scenario that was as severe as never before for the institutes: an intensification of geopolitical tensions was specified, accompanied by a resurgence of the corona pandemic. The consequences would be a slump in the economy, rising unemployment, high inflation and a slump in the stock markets. In the event of a crisis, the core Tier 1 capital ratio would fall from 15 percent at the end of 2022 to 10.4 percent at the end of 2025: That is better than in 2021, which the EBA justifies with the higher profits of the institutes.