European Central Bank Banking Supervision says no new cyber stress test is planned and highlights simplification work

In an interview with Les Echos, Claudia Buch, Chair of the Supervisory Board of the European Central Bank, said ECB Banking Supervision is prioritising cyber resilience and simplification of supervision, and that a new cyber stress test is not currently on the agenda. Instead, the focus is on ensuring banks put sufficient protections in place against rapidly evolving threats, including AI-enabled attacks, sharing lessons from previous cyber work, reviewing supervisory guides to make them clearer and discontinuing obsolete material. Buch also said supervision should become more proportionate to banks’ risk profiles and size, particularly in reporting. Geopolitical risk remains a standing priority, with the supervisor assessing how higher energy prices, tariffs and supply chain disruption could feed into credit risk. Credit quality has not yet deteriorated, with non-performing loans remaining around 2% on average, but weaker growth forecasts and rising corporate insolvencies have led to a reverse stress test to identify where vulnerabilities could emerge. On private credit, ECB Banking Supervision has identified banks with closer links to the market, found scope to improve risk management in several cases and is calling for greater transparency and better reporting in private markets, alongside international policy responses to address pockets of vulnerability. Outsourcing concentration to common IT providers could also give cyber incidents a systemic dimension.