The Italian banks involved in the EBA stress test are MPS, BPM, BPER, Cassa Centrale Banca – Credito Cooperativo Italiano, Credito Emiliano, Iccrea – Istituto Centrale del Credito Cooperativo, Intesa Sanpaolo, Mediobanca – Banca di Credito Finanziario, UniCredit.
These 70 banksof which 57 from the member countries of the Single supervisory mechanism (SSM), constitute 75% of the total assets of banks in the EU and Norway (compared to 70% in the 2021 stress test).
In parallel, the ECB will subject 42 euro area banks to the same stress test: this sample of 42 smaller banks joins the 57 euro area banks that fall into the group of 70 subjected to the stress test exercise. EBA stress.
Adverse scenario: general characteristics
The adverse scenario, the most unfavorable compared to those of past stress tests, is marked by a significant worsening geopolitical tensions and by a partial de-globalization taking into account the war in Ukraine, and by a serious deterioration of the economy (6% contraction of real GDP) and of unemployment, in a context of very high inflation, skyrocketing raw material prices, rising wages, high long-term interest rates with new prices of financial assets (stock exchanges – 55%) and residential and commercial real estate and tightening of sovereign risk for the most indebted states (spread at 400 basis points), return of infections from Covid-19.
In the adverse scenario, however, monetary policy and fiscal policy are constant, ie the exercise does not project any future changes with respect to the current state of monetary and fiscal policies. To give an example: the widening of spreads in the adverse scenario does not incorporate the use of the new protection against fragmentation (TPI), but only takes into account the anti-spread shield for deterrent power.