The adverse scenario has an impact of 485 bps on banks’ CET1 fully loaded capital ratio (497 bps on a transitional basis), leading to a 10.2% CET1 capital ratio at the end of 2023 (10.3% on a transitional basis).

The adverse stress test scenario was set by the ECB/ESRB and covers a three-year time horizon (2021-2023). The stress test was carried out by applying a static balance sheet assumption as of December 2020, and therefore does not take into account future business strategies and management actions nor any subsequent and future financial performance, a main point of difference with the US FED CCAR/DFAST exercises.

The results show that the EU banks are well capitalised, with some concerns for a few banks in Italy, Greece, Cyprus, Malta in particular.

More info here – https://www.eba.europa.eu/eba-publishes-results-its-2021-eu-wide-stress-test