Finland Times

The European Banking Authority (EBA) released on Tuesday its methodology and macroeconomic scenarios for the 2014 European Union-wide stress test.

The common methodology and underlying assumptions cover a wide range of risks including: credit and market risks, exposures towards securitisation, sovereign and funding risks.

The adverse scenario, used to assess the impact that changes in the economic environment have on EU banks, leads overall to a cumulative deviation of EU GDP from its baseline level by -2.2 percent in 2014, by -5.6 pct in 2015, and -7.0 pct in 2016. 

"I welcome today's publication by the European Banking Authority (EBA) of the key components of the forthcoming 2014 EU-wide stress test," EU Commissioner for Internal Market and Services Michel Barnier said in a statement.

"The purpose of the exercise is to identify any remaining vulnerabilities in the EU banking sector in order to make it more resilient and to provide a high level of transparency on EU banks' exposures, " he added.

The stress test will be conducted on a sample of 124 EU banks which cover at least 50 pct of each national banking sector.