The European Banking Authority (EBA) has conducted the 2023 EU-wide stress test exercise in cooperation with De Nederlandsche Bank (DNB), the European Central Bank (ECB), and the European Systemic Risk Board (ESRB) and has published the results. Rabobank took part in this exercise which assesses the resilience of banks.
Rabobank notes the announcements made today by the EBA on the EU-wide stress test. The 2023 EU-wide stress test does not contain a pass fail threshold and instead is designed to be used as an important source of information for the purposes of the Supervisory Review and Evaluation Process (SREP). The results will assist competent authorities in assessing Rabobank’s ability to meet applicable prudential requirements under stressed scenarios.
The adverse stress test scenario was set by the ECB/ESRB and covers a three-year time horizon (2023-2025). The adverse scenario was based on heightened geopolitical tensions with high and persistent inflation and interest rates leading to severe GDP loss.
The stress test was carried out by applying a static balance sheet assumption as of December 2022, and therefore does not consider future business strategies and management actions nor any future financial performance. It is also not a forecast of Rabobank’s profits. Compared with previous exercises, the 2023 EBA adverse scenario is more severe with a cumulative decline of EU GDP from the starting point of 6% over the three-year horizon. In addition, housing and commercial real estate prices in the Netherlands are hit relatively hard compared to the European average.
In the baseline scenario Rabobank’s fully loaded common equity Tier 1 ratio (CET1) would increase to 17.0% as per FYE 2025. Under the adverse scenario the CET1 ratio would end at 11.4% as per FYE 2025 and therefore remains well above the regulatory requirements (including the SREP requirement for 2023 of 9.9% and CET1 minimum requirement of 10.7%, applicable as of May 2023). Rabobank’s fully loaded CET1 ratio was 16.0% as per 31 December 2022, comfortably above its CET1 ratio ambition of >14%. Rabobank will announce its financial results for the first six months of 2023, including the CET1 ratio, on 10 August 2023.
The full results for Rabobank are available on the EBA website
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