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Deloitte comments on the Bank of England’s approach to stress testing the UK banking system

21 October 2015

Clifford Smout, partner, EMEA Centre for Regulatory Strategy, Deloitte:

"A number of smaller banks and foreign bank subsidiaries will probably be relieved that they will not be covered by these requirements for now."

"For those banks still involved, it is good that the data requirements will be locked down, and that the Bank of England will explore synergies in data collection across jurisdictions. This will help firms to invest in long term solutions."

"For those banks still in scope, though, the complexity of running the exercise is significant. Running these tests in parallel with the EU exercise next year will be a real challenge. Some banks will also input into the IMF’s UK FSAP review."

"The decision that hurdle (or ‘pass’) rates will be linked to internal capital requirements for each bank is interesting. It will make market interpretation of results harder, since these hurdles differ bank by bank and are typically not published. And since these hurdles are set at levels above the internationally-agreed minima, it is also going to make passing the tests harder."

End

Notes to editors

About Deloitte
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.

Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.

The information contained in this press release is correct at the time of going to press.

Member of Deloitte Touche Tohmatsu Limited.
 

Fern Hammond
Deloitte LLP
+44 020 7303 2329
+44 078 2689 1752
fhammond@deloitte.co.uk

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