Regulatory Alerts2026-06-03
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Stress Test 2026
The Central Bank of Iceland’s stress test indicates that the three systemically important banks (O-SIIs) would be resilient enough to maintain credit supply during a severe shock involving GDP contraction and asset price drops. Under the scenario, combined loan losses total 147 billion Icelandic króna, or 3.2% of the loan portfolio, while after-tax losses are limited to 3 billion króna. The Common Equity Tier 1 capital ratio declines by 2.1 percentage points, but overall and CET1 capital requirements are satisfied throughout the scenario. The report notes that the implementation of the CRR III regulatory framework has increased risk sensitivity, amplifying potential fluctuations in capital ratios during shocks.
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