Results of the 2025 stress tests led by the EBA and the ECB

The stress test launched by the EBA on 20 January 2025 covered the 64 largest banking groups in the European Union, including 51 banking groups under direct supervision by the European Central Bank (ECB), representing approximately 75% of total banking assets in the European banking system. Meanwhile, the ECB launched a complementary stress test on the same day for another set of 45 institutions under its supervisory remit.

The aim of these stress tests is to assess the resilience of the largest European banking groups against highly adverse macroeconomic and financial shocks, with a view to ensuring that they maintain sufficient levels of own funds to withstand them. In both cases, the EBA and the ECB applied the same scenarios and methodological principles.

8 French banks were included in the scope of the stress test led by the EBA: BNP Paribas, Bank of America Securities Europe, Groupe BPCE, Groupe Crédit Agricole, Groupe Crédit Mutuel, La Banque Postale, HSBC Continental Europe and Société Générale. 3 French banking institutions were included in the additional stress test led by the SSM: Bpifrance, RCI Banque and SFIL.

Today, the final results of these tests are published by the EBA and the ECB:

• Link to the EBA publication
• Link to the ECB publication

Participating banks projected their solvency and leverage ratios over a three-year horizon according to a baseline scenario based on macroeconomic forecasts published by central banks in 2024. The banks involved also provided additional projections under an adverse scenario deemed severe but plausible.

The adverse scenario considered is more severe than both the 2008 financial crisis and the recent adverse macroeconomic developments stemming from more recent shocks (such as the COVID-19 pandemic, the outbreak of war in Ukraine, market volatility following the announcements of changes to US tariff policies). The assumptions used in this scenario include, for France, a projected contraction of real GDP by a cumulative 5.9% over the three-year stress-testing horizon. The country’s unemployment rate is projected to reach 12.5%, while the projected value of real estate assets would drop significantly (a 28.2% drop for commercial real estate, and a 13% decline for residential real estate), and equity prices would drop by 50% in the first year.

Moreover, in order to ensure a highly conservative approach to financial projections, a number of methodological constraints are applied. For instance, the exercise is conducted on a static balance sheet basis, interest income projections are capped, and defaulted credit exposures cannot be recategorised as performing exposures.

Participating banks were required to conduct this exercise taking into account the new European regulatory framework CRD6/CRR3, which was effective on 1 January 2025 and transposes the final Basel III Accords into European Union law. The assessment of stress test results primarily focused on capital adequacy requirements, taking into account applicable transitional provisions designed to reflect institutions’ respective positions in light of the phased implementation of this reform.

These transitional provisions include temporary preferential treatments for the calculation of risk-weighted assets on specific exposures (such as real estate and unlisted corporates), as well as the threshold for application of the “output floor”, which limits capital gains derived from the use of internal models. Therefore, while the target output floor threshold is set at 72.5%, the interim level reached at end-2027 is 60%.

Regarding the starting point for the CET1 capital ratio at end-2024, the shift to the new regulatory framework had a marginal downward effect, as illustrated by the CET1 of French banks across both samples, which decreased by 0.2 percentage points. Given the strict methodological constraints and the scenario assumption of a significant deterioration in macroeconomic and financial conditions, stress test results confirm the resilience of the French banking system as a whole, as well as its shock-absorption capacity: account taken of transitional arrangements, the aggregated CET1 ratio of French banks would fall by 5.4 percentage points from 15.91% to 10.52%, and the leverage ratio would decrease by 1.4 percentage point from 5.54% to 4.14%.

Stress test results are taken into account a part of the Supervisory Review and Evaluation Process (SREP) and inform the calibration of corresponding capital requirements.