EU to start 2016 stress tests of banks today
Top European banks will face the latest check on their finances this week as regulators run stress tests on the sector in an effort to ensure its resilience to possible economic and other threats.
The European Banking Authority (EBA) said in a statement on its website yesterday it will start the test at 1700 GMT today and will publish the economic scenarios it will be based on, such as a sharp recession, at the same time.
The planned checks, which aim to help supervisors evaluate the profitability and sustainability of banks’ business models, come just after the latest bout of turbulence, with banking stocks pounded by market worries about the impact of slowing global growth and low interest rates.
Since the 2007-2009 financial crisis that forced taxpayers to shore up many lenders across the EU, regulators have held stress tests nearly every year. Banks had been given a 12-month break from the time-consuming stress tests, which from 2016 will be held every second year.
No test was held in 2015 after an intensive exercise that also included a review of assets on banks’ balance sheets in 2014 ahead of the European Central Bank becoming the supervisor for the eurozone’s top lenders...