Stress Test 2025

The European Banking Authority (EBA) has published the final version of the methodology, templates and guidance for the 2025 European Union (EU)-wide stress test. The objective of the stress test is to provide a common analytical framework to consistently compare and assess the Resilience of banks and the European banking system to shocks, as well as to challenge their capital position.

Stress Test 2025

Watch video

Executive summary

The EBA has published the final version of the methodology, templates and guidance for the 2025 EU-wide stress test. Based on the 2023 methodology, this new exercise incorporates the Capital Requirements Regulation (CRR3) and takes into account the delayed implementation of the Fundamental Review of the Trading Book (FRTB). The stress test will include 68 banks in the EU and Norway, covering 75% of the euro area banking sector. This broader scope and the introduction of proportionality features aim to improve the efficiency, relevance and transparency of the stress test results.

The EBA will start the exercise in January 2025 and expects to publish the results by early August 2025.

Main content

• Credit risk. Banks must adjust capital requirements for credit risk under CRR3 and estimate credit impairment losses using statistical methods and International Financial Reporting Standards (IFRS 9) for different risk levels (S1, S2, S3), and assess the impact on profit and loss (P&L) and risk exposure using stressed parameters.
• Market Risk, Counterparty Credit Risk (CCR) Losses and Valuation Reserves. Consistency with CRR2 for market risk capital requirements has been maintained, but the new CRR3 Credit Valuation Adjustment (CVA) methodology has been introduced. This requires banks to estimate the full revaluation of fair value positions taking into account shocks from market risk factors and the proportionality criteria for revaluation methods.
• Net Interest Income (NII). Includes all interest-bearing and interest-paying positions except trading and hedging positions, with specific requirements for baseline and adverse scenarios.
• Conduct and Other Operational Risks. Institutions must project the impact on P&L of conduct and other operational risks, using internal models and qualitative information. They must include capital projections for operational risk and establish minimum levels based on historical data. Restrictions have been imposed to ensure the consistency and appropriateness of stress scenarios, requiring justification for low estimates and keeping capital requirements for operational risk constant.
• Non-Interest Income, Expenses and Capital. Projections should be limited to 2024 levels in the baseline scenario and reduced in the adverse scenario. Categories such as dividend income and administrative expenses have fixed growth rates or floors. A common tax rate and simplified assumptions for deferred tax assets and liabilities have been used to ensure consistency and reliability.

Download the technical note on 2025 Stress Test.