Europe’s Banking Regulator Puts Back Next Stress Tests

The European Banking Authority (EBA), the sector’s regulator in the European Union (EU), said that it will conduct its next Europe-wide stress tests in 2016, rather than this year.

The delay gives European banks a year longer to prepare for the next round of stress tests that will examine the ability of the region’s lenders to survive a potential financial crisis or severe economic downturn.

The EBA will instead conduct a transparency exercise this year, similar to one carried out in 2013, that aims to provide detailed data on banks’ balance sheets and loan portfolios. It said the decision was in response to lenders strengthening their capital positions in readiness for reviews last year, the regulator said in a news release.

Last October, the EBA and the European Central Bank (ECB) announced the results of parallel reviews of lenders. The ECB’s test, known as an asset quality review, focused on 130 major banks across 18 countries in the eurozone. The EBA’s test extended to banks in the UK, Sweden and other EU countries outside the region.

In its stress test, the EBA identified 14 banks that failed to meet the capital requirements and were identified as requiring further buffers to withstand a potential future economic downturn.


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