European Banks Weather Stress Test Simulating Trade Shock (1)

European banks weathered a simulation of the potential impact of major international trade shocks, underscoring their ability to continue paying dividends and buying back shares.

On aggregate, the 64 lenders in the stress test saw their main capital ratio slide by 3.7 percentage points to 12.1% under an adverse scenario, the European Banking Authority said in a statement on Friday. That’s less than the 4.59 percentage-point hit in the last exam two years ago, which featured more banks.

Stress tests are a key tool for ensuring the banking industry is sufficiently resilient, so as to avoid a repeat of the ...