Notice: Trying to get property 'display_name' of non-object in /home/theproficientinv/public_html/wp-content/plugins/wordpress-seo/src/presenters/meta-author-presenter.php on line 40
Investor Strategy

UK banks press for scrapping stress tests in face of coronavirus, sources say

imageStock Markets7 hours ago (Mar 13, 2020 01:36PM ET)

(C) Reuters. UK banks press for scrapping stress tests in face of coronavirus, sources say

By Iain Withers and Huw Jones

LONDON (Reuters) – Britain’s banks have asked the Bank of England to scrap this year’s stress test of lenders and to soften rules to help them cushion expected losses as the coronavirus pandemic hits their staff and customers, banking sources said on Friday.

“It would be stupid to run a stress test during a stress,” a senior banker told Reuters. “Let’s concentrate on this situation rather than a hypothetical one.”

The central bank’s Financial Policy Committee, which monitors risks in the financial system, typically agrees scenarios for the annual test of banks’ resilience at its first quarter meeting and publishes them on March 24.

Results usually come out at the end of year.

Top bankers met Britain’s finance minister Rishi Sunak and Bank of England Governor Mark Carney on Thursday to discuss action to help smaller businesses hit by coronavirus. Andrew Bailey, who takes over from Carney on Monday, was present.

A second banking source said scrapping the stress tests was one of several support measures discussed with the central bank.

The BoE declined to comment on the stress test. The Treasury said it was a matter for the BoE.

After allowing banks to fully tap a special buffer of capital to support lending this week, the central bank’s Financial Policy Committee is expected to review whether to go ahead with the stress test.

The European Union regulators on Thursday said the bloc’s own test that was under way had been postponed until 2022.

Banks have also asked Sunak and Carney for relief from an accounting rule that forces them to provision early for loans at risk of turning sour, the two sources said.

Bankers are concerned a mandatory international accounting rule, known as IFRS 9 and which was introduced in 2018, will force them to book bad loans earlier than in previous crises, likely exacerbating early bank losses and hits to capital.

Sunak and Carney were told it could deter lenders from providing necessary relief to struggling businesses and consumers, if the banks feared hefty provisions.

“Don’t force banks to do things that are unhelpful … How do you avoid that double whammy?” the banker said.

The BoE has repeatedly said the British banking sector is holding enough capital.

Banks are already being forced to adapt to how they operate to minimize potential infections from the virus.

HSBC (L:HSBA) told all staff in Britain on Friday to avoid traveling between its offices, practice social distancing measures and work from home where possible.

UK banks press for scrapping stress tests in face of coronavirus, sources say

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Most Popular

Your daily news source covering investing ideas, market stocks, business, retirement tips from Wall St. to Silicon Valley.

Disclaimer:

TheProficientInvestor.com, its managers, its employees, and assigns (collectively "The Company") do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice.
The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2021 TheProficientInvestor. All Rights Reserved.

To Top