stress testing

Bank of England announcement of latest stress tests – Thoughts from 4most’s Chris Warhurst

Yesterday the Bank of England kicked off the 2017 stress testing season with publication of two economic scenarios.  While the second Annual Cyclical Scenario (ACS) looks at capital positions under stress and – given the economic assumptions are little different from last year, succeeds in its aim of making the exercise predictable – the first ever Bank Exploratory Scenario (BES) tests the banks’ ability to react to a world where the picture is one of compressed profit margins and competition for funding.

A stress test that can’t fail?

Last week the headlines unveiled ramblings of a new stress test from Europe’s top banking regulator, which it suggests is impossible for the region’s lenders to fail.  True?  Well, the watered-down, stress-free stress tests come at a time of market chaos, according to reports, and also amid investor concerns over the strength and stability of the European banking industry.