Santander Corporate & Investment | The ECB published on Tuesday the aggregate results of its vulnerability analysis of the 86 banks directly supervised under the Single Supervisory Mechanism. This shows that “the euro area banking sector can withstand the stress induced by the pandemic but, if the situation worsens, the decline in bank capital would be significant. Furthermore, the ECB has extended its recommendation that banks should not distribute dividends until 2021.
ECB stress tests
MADRID | By JP Marín Arrese | Most banks have comfortably overcome the stiff hurdles raised by the EU-wide stress test unveiled on Sunday. A reassuring outcome was widely expected, as Europe cannot afford to destabilise its financial sector when economic performance looks so grim. Yet, securing a fair result fails to endorse banking resilience should the underlying assumptions underestimate key risks. This shortcoming was evident from the start. For, the stress test builds on potential shocks failing to reflect key vulnerabilities, thus hampering its ability for properly assessing financial stability in rough times.