CET1 ratio of banks in Europe Q1 2023, by country

Capital ratios express a bank’s capital as a percentage of its risk-weighted assets (RWAs). Capital requirements for European banks were raised after the Basel III accord and phased in on the 1st of January 2015, with a new minimum requirement of CET1 ratio of 4.5 percent. As of the first quarter of 2023, all countries banking systems more than met the CET1 ratio required.

European Banking Authority stress test

Since 2014 the European Banking Authority has conducted a stress test in order to establish whether Europe's largest banks could withstand another financial crisis. The test measures the capital ratio of each bank over a 3-year adverse scenario. During the 2021 stress test, apart from the Italian bank Banca Monte di Paschi di Siena, all banks were concluded to have enough capital to weather such a storm in the near future. The best performing bank during the last stress test was the Dutch bank Nederlandse Waterschapsbank N.V.

Liquidity coverage ratio (LCR)

As of January 1st, 2015, it became a requirement for banks to hold a minimum of 60 percent in high quality liquid assets (HQLA), which allowed them to survive in times of liquidity stress lasting up to 30 days. This minimum requirement was to increase annually by 10 percent until it reaches 100 percent as of 2019. As of March 2023, all European countries were able to meet this minimum requirement.