European Banking Authority to stress test how banks would cope with trade wars

In launching its latest round of 'stress tests', which will cover 64 banks, the group said it would publish the results of the check-up at the start of August

In parallel, the European Central Bank will conduct its own stress tests on a group of banks that are not covered by the European Banking Authority.

The European Banking Authority said on Monday that it would assess how European banks would react to a hypothetical spiralling of geopolitical tensions and ensuing trade wars in an upcoming health check of the industry.

The simulation, which assumes a dramatic blow to the European economy from geopolitical and trade shocks, kicks off just as Donald Trump is sworn in as US president and prepares to review trade relationships with key partners.