The qualitative results of the stress test will be incorporated into the definition of supervisory measures and can even have an impact on Pillar 2 requirements.
The quantitative results of the stress test, namely the fall in the Common Equity Tier 1 (CET1) ratio a bank faces between its starting point at end of 2015 and 2018 in the adverse stress test scenario, will be one input factor for Pillar 2 guidance.
In defining Pillar 2 guidance, the ECB will use a wide range of information. One benchmark will be a bank’s post-adverse scenario result in relation to a capital ratio of 5.5% — or, in the case of global systemically important banks (G-SIBs), 5.5% plus the G-SIB buffer. This result is further adjusted up or down, taking into account other factors including the specific risk profile of the individual institution and its sensitivity towards the stress scenarios; interim changes in its risk profile after the cut-off date of the stress test (31 December 2015); consequences of the static balance sheet assumption of the stress tests and measures taken by the bank to mitigate risk sensitivities, such as relevant asset sales. Consequently, the stress test results will feed into Pillar 2 guidance in a non-mechanistic way.   _{Your Comment}