European banks promoted by the 'stress test': Italian banks among the most solid

The EU banks subjected to the European Banking Authority's 2025 stress test would 'remain resilient even in a hypothetical severe downturn in the economy': with a total loss of EUR 547 billion and a 370 basis point drop in Cet1 capital to 12.1 per cent in 2027 from 15.8 per cent at the start, they would maintain a 'strong capital position and ability to continue supporting the economy'. This is stated in simulations conducted by the EBA on 64 banks representing 75 per cent of bank assets. The simulated scenario is a 'sharp deterioration in the global macro-financial situation'. Reassuring' results - explains the Eba - but 'maintaining adequate capital is essential to ensure the safety of the European banking system'.

Italian banks in the group of the most solid banks in the face of the capital impact of the 2025 stress tests, with total Cet 1 capital absorption in the face of adverse scenarios around 150 basis points, or 1.5 percentage points: only Portugal (kickback of less than 50 basis points), Sweden (less than 100 basis points), Hungary, Greece (just over 100 basis points), Poland and Norway do better. For German and French banks, the capital absorption is close to 400 basis points.

A simultaneous and prolonged recession in the EU and other advanced economies, caused by serious upheavals: 'an escalation of geopolitical tensions, especially in the Middle East, and a worldwide race to protectionism, including tariffs'. This is the scenario of the 2025 stress tests in which the European Banking Authority subjected 64 EU banks to a 'stress test' to check their resilience in terms of capitalisation and leverage. The EBA notes that 'although some elements of the adverse scenario have started to materialise, such as the US return to tariffs and a new geopolitical escalation in the Middle East, economic activity in the EU and globally has remained relatively resilient'.

All European banks pass the stress tests in terms of capital levels, but during at least one of the three years of the three-year horizon 2025-2027 there are 17 banks that, in the adverse scenario of the tests, trigger the 'Mda trigger' or the leveraged ratio Mda trigger' by exceeding the maximum distributable amount ratios: they will have to make adjustments, for example by tightening the distribution of dividends. This is stated in the document of the 2025 stress tests conducted by the European Banking Authority. The Eba also notes that 'for a bank' there is a breach of the Srep Tier 1 capital leverage ratio.

Banks supervised by the ECB proved resilient in the stress test conducted by the ECB, carried out with the same 'adverse scenario' parameters as the EBA stress test but expanded to include 45 medium-sized banks. At the end of the three-year period considered in the stress test, in the adverse scenario, the 96 banks included in the exercise show total losses of EUR 628bn from deterioration of credit, market and operational risk. This is a higher loss than the 548 billion loss in the 2023 stress test. The Cet1 ratio would thus fall from 16 per cent to 12 per cent.