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Claudia-Maria Buch, chair of the Supervisory Board of the European Central Bank (ECB), at ECB headquarters in Frankfurt am Main, Germany, November 18, 2025. Claudia-Maria Buch, chair of the Supervisory Board of the European Central Bank (ECB), at ECB headquarters in Frankfurt am Main, Germany, November 18, 2025.

The European Central Bank’s (ECB) “Supervisory Review and Evaluation Process,” widely known as SREP, is the annual health check for the eurozone’s major banks. It aims to assess how the sector’s major players manage risk, allowing for adjustments to capital requirements to ensure banks can absorb potential losses if necessary.

The results of the 2025 SREP, published on Tuesday, November 18, are broadly reassuring: The eurozone’s 105 largest banks continue to post “strong” profitability, thanks to a recovery in their margins since the end of negative interest rates, even as upward pressure on costs has increased.

The Frankfurt-based institution has also slightly lowered the minimum capital requirement, setting it at 11.2% of risk-weighted assets for 2026, down from 11.3%. This reduction is largely symbolic, as the average actual level of this indicator is much higher: It stood at 16.1% in the second quarter of 2025.

While the European banking system is well equipped to operate in the current geopolitical, macroeconomic and financial context, the ECB has made it clear that it will not let up on its vigilance. “Global uncertainties have surged to exceptional levels, creating an environment of heightened fragility, where risks once considered remote are becoming more likely,” it said, before listing its areas of concern: geopolitical and trade tensions, the climate crisis, demographic changes and technological disruptions.

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