BoE publishes Financial Stability Report and stress test results

BoE has published its latest Financial Stability Report together with the results of the 2018 Stress Tests.

  • The Financial Stability Report found that the UK financial system has good resilience to a range of risks, including Brexit – banks could lend in a scenario more severe than the financial crisis and are prepared and strong enough to serve consumers and businesses in the event of a disorderly Brexit;
  • Stress tests showed the banking system is resilient to deep simultaneous recessions and that stress tests and supervisory actions over the past few years have ensured levels of capital that would withstand the shocks of a disorderly Brexit;
  • the FPC is keeping the countercyclical capital buffer at 1% for the time being;
  • leveraged lending has increased, but banks hold only a very small percentage of securitisations of leveraged loans; and
  • all banks that participated in the stress test remain above their risk-weighted CET1 capital and Tier 1 leverage hurdle rates.

Emma Radmore