The European Banking Authority (EBA) has launched the 2025 EU-wide stress test and published the baseline and adverse macro-financial scenarios for the 2025–2027 horizon. The exercise assesses EU banks’ solvency under a hypothetical adverse environment, supports cross-bank comparability through bank-by-bank disclosure, and provides input to the Supervisory Review and Evaluation Process (SREP) run by competent authorities. The test covers 64 banks, including 51 supervised in countries participating in the Single Supervisory Mechanism (SSM), representing roughly 75% of total banking assets in the EU and Norway. The adverse scenario is framed around a severe escalation of geopolitical tensions and more inward-looking global trade policies, with persistent trade and confidence shocks, higher energy and commodity prices, supply-chain disruption and a worldwide contraction. It features a cumulative EU GDP decline of 6.3% over 2025–2027, unemployment 6.1 percentage points above baseline by the end of the horizon, and inflation of 5.0% in 2025 and 3.5% in 2026 before falling to 1.9% in 2027; it also includes gross value added growth paths for 16 sectors. The exercise is run at the highest level of consolidation under the Capital Requirements Regulation/Capital Requirements Directive (CRR/CRD) perimeter, uses a “no policy change” convention for the adverse scenario, and reflects the new EU banking package applying from 1 January 2025 in its methodology and templates while remaining a risk exercise rather than an assessment of regulatory-change impacts. The EBA expects to publish results at the beginning of August 2025.
European Banking Authority 2025-01-20
European Banking Authority launches 2025 EU-wide stress test for 64 banks under adverse scenario with 6.3% cumulative GDP decline
The European Banking Authority has initiated the 2025 EU-wide stress test, releasing baseline and adverse macro-financial scenarios for 2025–2027. It evaluates the solvency of 64 EU banks under severe geopolitical and economic stress, supporting cross-bank comparability and informing the Supervisory Review and Evaluation Process. The adverse scenario includes a 6.3% EU GDP decline, significant unemployment and inflation increases, under the Capital Requirements Regulation/Directive framework.