The European Banking Authority (EBA) has published its 2016 EU-wide stress test draft methodology for discussion. The stress test will be carried out at the highest level of consolidation on a sample of banks covering approximately 70% of the EU banking sector. 53 EU banks will participate, 39 of which fall under the Single Supervisory Mechanism (SSM).
No single capital threshold is defined for this exercise rather banks will be assessed against relevant supervisory capital ratios under a static balance sheet. EU banks' resilience will be assessed against a common macroeconomic baseline and adverse scenario based on 2015 year-end figures, and applied over a period of three years to end-2018. The final methodology will be published at the launch of the stress tests in February 2016. The outcomes of the stress test are expected to be published at the beginning of Q3 2016.