The major Swedish banks are resilient and have the ability to withstand a sharp deterioration in the market, according to the stress test conducted by the European Banking Authority (EBA).
The EBA's stress test tests the resilience of 48 of the largest European banks to a sharp deterioration in the economy combined with a large fall in real estate prices. The stressed scenario continues for a period of three years starting in December 2017.
EBA's stress test shows that the major Swedish banks (including Nordea since the bank still had a Swedish parent company when the stress test began) are resilient to a sharp deterioration in the economy. For Sweden, the scenario in EBA's stress test assumes a greater downturn in the economy than the stress test used in FI's supervisory assessment of the size of the banks' capital planning buffer. In terms of the Common Equity Tier 1 capital ratio (CET1 ratio), the EU test shows in reduction of at the most between 2.7 and 3.3 percentage points in the stressed scenario.
The EBA's stress test has no automatic link to the capital requirements that FI places on the Swedish banks. To determine the size of the capital planning buffer in the annual assessment of the banks' total capital needs (SREP), FI uses a stress test method that is described in Finansinspektionen's memorandum Stress Tests Methodology for Determining the Capital Planning Buffer (2016).