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What can be expected from the 2023 stress test methodology?

On the 21st of July, the European Banking Authority (EBA) launched its draft stress test methodology for 2023. In coordination with the European Systemic Risk Board (ESRB) it is EBA's responsibility to initiate and coordinate the EU-wide stress tests to evaluate financial institutions' resilience to adverse market conditions.

When comparing the previous and new stress test methodology versions, we can see that:

  • the new 2023 methodology covers the same risk areas as the stress test 2021,
  • as a newly added feature, the projections on net fee and commission income (NFCI) will be based on a top-down model, this is a first step toward revising the EU-wide stress test framework towards a hybrid (bottom-up and top-down) approach,
  • the number of covered banks has been increased by an additional 26 banks, which will be included in 2023 stress test cycle, totaling 76 banks and
  • to alleviate some organizational burden by stress testing, additional proportionality considerations have been introduced into the new methodology.

The draft methodology and templates will be presented to and discussed with banks, their input will be incorporated into the final stress test methodology.

The final results are expected to be published by end of 2022. The exercise will be launched in January 2023 and results are expected by end of July 2023.

For inquiries please contact:

RBI Regulatory Advisory

Raiffeisen Bank International AG | Member of RBI Group | Am Stadtpark 9, 1030 Vienna, Austria  | Tel: +43 1 71707 - 5923