By Nikos Kotsikopoulos
The 110 major systemic banks in the eurozone are resistant to a serious geopolitical shock, as the geopolitical tests of the SSM showed, but they are unclear and incomplete in the way they have been and the European Central Bank knows and acknowledges it.
This is about the method of exercise that was at least paradoxical: He asked banks to calculate a 3% (300 basis points) drop in their own funds and to say from what geopolitical shock this was caused.
Most managed to create reasonable scenarios, but the ECB found cases where a shock to liquidity seems to be underestimated or countermeasures are based on excessively optimistic assumptions. Thus the tests remained unclear, but the exercise highlighted these weaknesses in the way some banks measure the risks and plan their reaction to a crisis.
In the reverse stress test of 2026 110 banks directly supervised by the ECB participatedThe exercise was different from the well-known pan-European stress tests. About 20% of the banks chose an even greater fall in capital.
Therefore there are no scores, "successors" and "failors" nor publicised results per bank. The ECB itself notes that this is the case Quality exercise with different design and target than normal pan-European tests. The individual findings for each bank will be used in the supervisory dialogue and the quality weaknesses can affect the SREP assessment of banks.
What banks would do in a major crisis - the risks
Of the most specific findings made public, (because names and scores were not given), are measures that banks themselves state could take:
- 59% would suspend or limit distributions to shareholders,
- 57% would limit his openings.
- 50% would reduce or stop new jobs and
- 47% would tighten the loan criteria.
At the same time, 44% would go to cost reduction, while 40% predicts portfolio or other assets sales.
The ECB has reservations as to whether all this can actually be done in a general crisis. If Many banks simultaneously attempt to sell portfolios or raise new capital, market conditions may not allow the prices and conditions calculated in their plans.
The risks seen by banks
Particularly strongly appears and the danger of cyberattacks. The 86 out of 110 banks included them among significant non-financial risks and 57 classified them as the most basic risk.
The following are the following: interruption of services by external providers, which 44 banks reported. It is no coincidence that 74% of banks provide for measures to strengthen the resilience of information systems and to recover from cyber attacks.
In the chapters, the The amount to be reported shall be the amount reported in column 060 of this row. It starts at about 15.5%, retreats to 12.1% before the countermeasures and recovers at about 13.6% after the moves predicted by banks.
The Risks which weighs on potential credit losses and lowest profitability, with greater vulnerability in sectors such as: Processing, transport, agriculture, construction and hospitality-focusing.
The best picture emerges in liquidityThe median liquidity coverage index (LCR) starts at 186% and disappears to 163% at the end of the year of the extreme scenario, remaining significantly above the 100% threshold. The central range of banks is reduced from 175%–204% to 150%–185%.
But here there is also an important reservation. The ECB itself says that several banks showed very little deterioration in their liquidity despite the large loss of capital they had assumed. This gives rise to questions as to whether the test blow has been adequately reflected. The picture is weaker in liquidity in foreign currency, where some banks fall below 100%.
