PARIS/FRANKFURT (dpa-AFX) - Two years after the last bank stress test, European Union supervisors are once again taking a close look at the stability of the money houses. The European banking authority is asking 64 institutions in the EU and Norway to subject their capital buffers to a severe crisis in the coming months. These financial institutions represent about 75 percent of the banking market, as the European Banking Authority (EBA) announced in Paris on Monday.

The crisis scenario of the test covers the years 2025 to 2027. In it, geopolitical tensions cause the EU's economic output to fall by a total of 6.3 percent. At the end of this period, the unemployment rate stands at 6.1 percent. Inflation rises to 5.0 percent in the current year, before falling back to 3.5 percent in 2026 and 1.9 percent in 2027.

The banks are to examine how they would cope with such an economic crisis. Of the 64 institutions taking part in the stress test, 51 are based in the eurozone. The EBA plans to publish the results of the test at the beginning of August.

In Germany, Bayerische Landesbank, Commerzbank, Deutsche Bank, DZ Bank, Landesbank Baden-Wuerttemberg, Landesbank Hessen-Thuringen (Helaba), Norddeutsche Landesbank (Nord LB) and the car financing company Volkswagen Financial Services are reportedly being scrutinized. In addition, several subsidiaries of US banks based in Germany have to undergo the EBA test.

The previous test involved 70 banks from 15 European countries. The European Central Bank (ECB) scrutinized more than 40 additional banks from the eurozone, which it supervises directly, in 2023.

In the EBA test, the banks performed better than in the previous test in 2021. The EBA attributed this to higher profits at the institutions and better asset quality at the start of the 2023 test. However, three banks failed to meet their capital requirements in the simulated crisis scenario.

Since the global financial and economic crisis of 2008/2009, regulators around the world have been using such stress tests to regularly check how vulnerable banks would be in the event of a crisis. The tests are designed to reveal risks on the balance sheets as early as possible. If necessary, supervisors can subsequently demand that individual financial institutions strengthen their capital buffers at an early stage. However, stress tests are not without controversy: the question of which risks are weighted how heavily in the hypothetical scenarios is left to the supervisors./stw/nas/he