The EBA publishes methodology, draft templates, and key milestones for its 2025 EU-wide stress test

The European Banking Authority (EBA) today released the final methodology, draft templates, and template guidance for the 2025 EU-wide stress test, along with the milestone dates for the exercise. The methodology and templates cover all relevant risk areas and incorporate feedback received from the industry. The stress test exercise will formally start in January 2025, following the release of the macroeconomic scenarios, with the results scheduled for publication in early August 2025.

The 2025 EU-wide stress test adopts a constrained bottom-up approach, incorporating some top-down elements. Balance sheets are assumed to remain constant, with the primary focus being the evaluation of the impact of adverse shocks on banks’ solvency. Participating banks will be required to estimate the progression of common risk factors (credit, market, counterparty, and operational risks) under a baseline and an adverse scenario. Additionally, banks must project how these scenarios will affect key income streams. For net fee and commission income, securitisation risk weights, and the credit loss trajectory of sovereign exposures, banks will use pre-defined parameters. In addition, the projections of net interest income will be centralised. The methodology also defines the sample of banks involved in the exercise.

The draft stress test templates and guidance published today might need some minor technical adjustments before their final publication at the launch.

Key Milestones for the 2025 EU-wide Stress Test:

• Launch of the exercise: second half of January 2025
• First submission of results to the EBA: end of April 2025
• Second submission to the EBA: early June 2025
• Final submission to the EBA: early July 2025
• Publication of results: beginning of August 2025

Compared to the previous stress test, the timeline has been adjusted to accommodate the feedback received from the industry and the entry into force of the revised Capital Requirements Regulation and Capital Requirements Directive (CRR3/CDR VI).

Note to the editors

1. The aim of the EU-wide stress test is to assess the resilience of EU banks to a common set of adverse economic developments, identifying potential risks, informing supervisory decisions, and increasing market discipline.
2. The EBA conducts the stress test in a bottom-up fashion with some top-down elements, using consistent methodologies, scenarios, and key assumptions developed jointly with other authorities.
3. The exercise is coordinated by the EBA in cooperation with the European Central Bank, the European Systemic Risk Board, and the Competent Authorities from all relevant national jurisdictions.
4. To give banks sufficient time to prepare, the EBA published the methodology and templates well ahead of the formal launch, when the relevant macroeconomic scenarios will be released.