The EBA has published the results of its 2021 EU-wide stress test which involved 50 banks from 15 EU and EEA countries.
The results show that under a very severe scenario, the EU banking sector would stay above a CET1 ratio of 10%, with a capital depletion of EUR 265bn against a starting CET1 ratio of 15%. Credit losses explain most of the capital depletion.
The exercise did not have a defined pass/fail threshold but rather sought to give supervisors a tool to assess banks’ ability to meet prudential requirements and assist in individual discussion between supervisors and banks.