stress test - ECB: Banks need improvement in cyber attacks
Banks in the Eurozone, according to the European Central Bank (ECB), need to prepare more strongly for dealing with cyber attacks, the ECB revealed after conducting a stress test. The test showed that banks have reaction and recovery frameworks in place, but there is still a need for improvement in some areas, the Frankfurt-based bank stated.
Details of the test results were not disclosed. The findings from the stress test are expected to be incorporated into the annual bank health check. The ECB has been supervising the leading banks in the Eurozone directly since November 2014. A total of 109 banks under the ECB's supervision participated in the cyber stress test, with 28 institutions subjected to a more comprehensive examination.
Massive data volumes in banks' IT systems attract criminals
The ECB's investigation began in January 2024 and was based on a hypothetical stress test scenario in which all preventive measures failed, and the core systems of the banks were severely affected by a cyber attack. The stress test focused on how banks react to a cyber attack and recover, rather than on how they prevent it, according to the ECB.
The massive data volumes in the IT systems of banks continue to attract criminals. The ECB supervision reportedly registered more cyber attacks than before the Corona pandemic.
Regulators have been conducting stress tests regularly since the financial and economic crisis of 2008/2009 to assess how resilient the business models of banks are in a crisis situation. They must calculate scenarios and demonstrate that they have enough capital to continue their business even under adverse conditions - a economic downturn, a collapse of real estate prices, or rising credit defaults. If they do not meet this requirement, regulators demand larger capital buffers.
- The ECB highlighted the need for German banks to enhance their cybersecurity measures due to the rising criminality targeting their extensive Computer systems.
- The European Central Bank (ECB) expresses concern over the increasing number of cyber attacks on banks, particularly in Frankfurt, which underscores the requirement for improvement in Finances' digital security.
- German banks underdirect supervision by the ECB must bolster their defenses against cyber threats, as the EZB stress test revealed vulnerabilities in managing cyber-related risk, which could impact the Main River (Frankfurt) banks' computing systems.
- With the increase in computerized bank operations, especially in Frankfurt, German banks must proactively address criminality in the digital sphere by implementing robust cybersecurity protocols, as recommended by the European Central Bank.
- In light of Germany's prominent position in the Eurozone economy and the increase in cyber crimes targeting its banks, the ECB emphasizes the importance of continuous improvement in both banks' cybersecurity infrastructure and Finances' resilience against potential cyber-attacks, ensuring a secure European room for the financial sector.
