Bank of England cancels 2020 stress test amid Covid-19 outbreak
The Bank of England is cancelling the 2020 stress test for the eight major UK banks and building societies.
The Bank says the decision will help lenders focus on meeting the needs of UK households and businesses via the continuing provision of credit amid the Covid-19 pandemic.
The Bank and the PRA have announced a number of measures to alleviate operational burdens on regulated firms in the wake of the coronavirus outbreak.
Last week, the Financial Policy Committee (FPC) reduced the UK countercyclical buffer rate to 0% of banks’ exposures to UK borrowers with immediate effect. The FPC and the Prudential Regulation Committee (PRC) expect that all elements of banks’ capital and liquidity buffers can be drawn down as necessary to support the economy through this temporary shock.
In a statement, the Bank of England said: “The recent 2019 stress test showed that the UK banking system was resilient to deep simultaneous recessions in the UK and global economies that are more severe overall than the global financial crisis, combined with large falls in asset prices and a separate stress of misconduct costs.”
Source: Financial Reporter