ECB Stress Test to Ask Banks Which Geopolitical Risks Would Hurt

The European Central Bank’s next stress test will ask lenders to come up with hypothetical situations in which risks like trade disruptions or wars could hit their financial strength.

The exam next year will “assess which firm-specific geopolitical risk scenarios could severely impact their solvency,” Claudia Buch, who leads the ECB’s Supervisory Board, told European lawmakers on Tuesday in Brussels.

Claudia Buch

Photographer: Alex Kraus/Bloomberg

Buch has pushed lenders to improve their ability to grasp and withstand the fallout from so-called geopolitical risks since taking over as the ECB’s top banking watchdog last year. The focus appears prescient as US President Donald …