The European Central Bank’s cybersecurity stress test next year won’t have a direct impact on capital requirements, limiting the exercise’s potential repercussions for investor payouts.
The test will be a learning experience for lenders and the supervisor, ECB officials said on a call with bank executives last week, according to people briefed on the meeting. Even bad results for participating banks won’t automatically translate into higher capital requirements, the officials said, though they didn’t rule an indirect impact.
The ECB indicated on the call that the test will simulate an attack targeting the databases underlying the banks’ main operating systems, and that it intends to send out test documents to banks around November, said the people, who asked for anonymity to discuss the private information.
An ECB spokesman declined to comment.
The supervisor is currently laying the groundwork for its first cyber stress test of Europe’s banks, to map what it sees as rising risks to financial stability emanating from criminal acts such as data theft and cyber attacks. Slated for the beginning of next year, the test will assess how the region’s lenders would respond to a potentially crippling attack on their IT.
Stress tests are among the most important tools for the ECB to determine how resilient banks are to various shocks. Bad results in its biennial exam of banks’ ability to withstand an economic downturn generally lead to higher capital requirements, restricting lender’s ability to pay dividends or carry out share buybacks.
The characterization of the stress test as a learning exercise is reminiscent of how the ECB billed its first climate stress test for banks, conducted last year. While that test didn’t have a direct impact on capital requirements either, the ECB later said that it did contribute to its decision to increase the minimum amount of capital several banks have to hold by informing its annual assessment of the risks those banks are facing.
The cyber stress test will be “a new exercise, and we will devote quite a significant amount of time and resources to it,” ECB banking supervision head Andrea Enria said in an interview with a Lithuanian newspaper in March. Enria said he expects to publish results by mid-2024.
Photograph: A sculpture by artist Guiseppe Penone outside the European Central Bank (ECB) headquarters in Frankfurt. Photo credit: Martin Leissl/Bloomberg
Topics Cyber
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