The European Central Bank’s Banking Supervision arm has laid out its supervisory priorities for 2026-2028, and the message to Europe’s biggest lenders is clear: brace for impact. The framework zeroes in on geopolitical instability, macro-financial shocks, and the increasingly tangled web of digital and cyber risks facing the continent’s banking sector.
Published on November 18, 2025, the priorities reflect a central bank that sees storm clouds on multiple horizons.
Stress tests with teeth
The centerpiece of the new supervisory cycle is a 2026 thematic reverse stress test. Unlike a traditional stress test, which asks “how bad does it get under this scenario,” a reverse stress test flips the question: “what would it take to break you?”
In this case, 110 banks will be required to model specific scenarios that could deplete at least 300 basis points of their Common Equity Tier 1 capital. Results from this exercise are expected by summer 2026. They won’t just be academic, either. The findings will feed directly into qualitative assessments within the Supervisory Review and Evaluation Process, known as SREP, and will shape Pillar 2 Guidance, which determines how much extra capital individual banks need to hold above minimum requirements.
