Supervisory stress tests are a tool to assess banks’ resilience to shocks.
One of the biggest exercises is the EU-wide stress test. It is a system-wide solvency stress test, assessing the resilience of the European banking sector, that is run every other year by the European Banking Authority and the National Competent Authorities. The latest stress test was carried out in 2025. As a follow-up, AFME and its members are working on recommendations to the EBA and ECB/SSM to refine the methodology for 2027.
The scope of the stress test covers the vast majority of AFME members. AFME supports members in their preparation and execution of the exercise through technical analysis, and thought leadership. We also act as a platform for exchange and industry-wide feedback to the European Banking Authority and the European Central Bank (ECB) as the main quality assuring authority for AFME members. AFME also functions as a facilitator for authorities’ end-to-end testing whereby our members can connect and communicate on technical issues. Finally, AFME supports lessons learned by providing valuable feedback to the authorities on methodology, scenarios and processes.
AFME’s advocates for a methodology and scenarios that are suitable for our members. This entails appropriate design of risk methodologies and risk transmission channels to suit the business models of internationally active wholesale banks. This includes the projections for net trading income and market risk Risk-Weighted Assets (RWA), securitisation and counterparty credit risk. Moreover, we advocate for severe but plausible scenarios that are empirically evidenced rather than model based. AFME also supports transparency of the supervisory assessment process and results in order to facilitate investor communication and public communication as a whole.
Beyond the EU-wide stress test, AFME also supports its members in thematic supervisory stress test by providing a communication channel to relevant authorities and a platform for exchange among participating banks.