On Friday 17 November, the European Banking Authority (EBA) published its final methodology for the 2018 stress tests to be applied to 49 European banks, or 70% of the EU banking sector.
The final methodology does not feature any major changes compared to the draft version published by the authority at the end of June (see EUROPE 11804). For the first time, it includes the impact of the implementation of the international financial standard IFRS 9, for instance in terms of the accounting treatment of anticipated losses on financial assets.
Readers may recall that following discussions on the draft methodology with the banking industry over the summer, the EBA finally decided to postpone the publication of the results of the tests, initially announced for June 2018, until November 2018 (see EUROPE 11895), to take account of the challenges thrown up by the IFRS 9 standard in terms of the availability of figures early in 2018.
As in 2016, banks will be tested on their capacity to ride out a series of risks that may have an impact on their solvency, in other words operational, credit (including securitisation) and counterparty risks, in two different scenarios - a base and a crisis scenario.
The scenarios will be revealed alongside the official launch of the exercise in January 2018. The methodology may be consulted at: http://bit.ly/2hNiXZU . (Original version in French by Marion Fontana)